Applying for a loan? Avoid painful mistakes with this Q&A
Using a loan shark will give temporary relief, but using a registered credit provider should always be the choice, says Old Mutual Finance
Acting in haste about money matters often means long-term regrets. Thinking over your choices and where the money to repay the loan is going to come from are the right things to consider, says Old Mutual Finance.
When money pressures grow, many of us will think about borrowing money and not worrying too much about where we are getting the cash. Before making mistakes that could be stressful, read these questions that are often posed to Old Mutual Finance, together with the responses from the CEO of Old Mutual Finance, Jan Moganwa.
Q: I urgently need money. Banks take time to approve loans, while a loan shark will give me cash today. What should I do?
A: Using a loan shark will give temporary relief. They are called loan sharks or mashonisas, because they can “bite” when things go wrong and make things difficult for customers. Using a registered credit provider should always be the choice. You can also get the cash you need at Old Mutual Finance in a few hours.
You should also know that:
- Old Mutual Finance’s rates will always be legal.
- Old Mutual Finance sets loan repayment for up to 72 months. Loans can become onerous over extended periods, while paying a loan over, for instance, 84 months, will also cost more in interest.
- Though your monthly instalment might be less if the repayment period is extended, the longer the repayment period, the more interest you pay on the amount you borrowed over the life of the loan.
Q: What should I be thinking about when I need to consider getting a loan?
A: Besides the monthly repayment, you should be looking at the interest rates, repayment periods and total cost of the loan.
Q: Are there any warning signs I should be looking out for when I need a loan?
A: Yes. Bad signs include:
- An offer that looks too good to be true. It’s time to be careful.
- Promises of loans being available in a few minutes.
- Loan sharks may also:
- mention small loans and offer large loans in the hopes that they can tempt you to borrow more than you need;
- not mention interest rates;
- not ask you to show what you earn and what you spend to see if you can afford to repay a loan;
- not ask you for the necessary income and expenditure verifications;
- demand that you hand over your ID, bank card or driver’s licence to secure a loan, which is illegal; and
- give you no paperwork.
Q: What would Old Mutual do if I found it difficult to pay off a loan?
A: If you found it difficult to pay your loan, Old Mutual Finance could consider:
- Rescheduling the loan, giving you more time to pay and reducing the monthly payment;
- Helping you to consolidate your debt;
- All your debts would be consolidated into a single total amount;
- One interest rate would apply to the single loan; and
- Monthly instalments would be reduced, and you would have more time to pay the debt.
Q: Does Old Mutual Finance offer customers with good credit better interest rates than people who have poor credit records?
A: Yes. You could be offered a lower interest rate if you have a good repayment record.
Q: A friend of mine said they were refused a bank loan and had to use a loan shark to get cash. What is your response to this scenario?
A: If Old Mutual Finance rejects a loan application, it’s because it does not lend money to people who don’t have a good credit history, can’t afford it or are too deep in debt.
If your application is rejected, this should be seen as a warning sign that your finances are in a poor state, and that the bank is concerned about adding to the financial burden you are carrying. You should examine your spending and your debt. Think about applying for debt consolidation or debt review if things are bad.
A final thought
Communication should always be the first step when financial problems occur. The sooner issues are discussed, the more straightforward solutions are likely to be. Loans are valuable financial tools. But, when used irresponsibly and too often, loans can result in financial hardship and stress. There is no substitute for personal financial planning and getting professional help to set a financial path for your life.
Old Mutual loan offerings are made available through Old Mutual Finance (RF) (Pty) Ltd, a licensed Financial Services and Registered Credit Provider NCRCP35. Ts & Cs apply.
This article was paid for by Old Mutual Finance.