What do Lenders Look at Before Giving You a Loan?
Since personal loans are typically “unsecured”, meaning you don’t put up a house or car as collateral, lenders take on more risk. Private lenders in South Africa have to adhere to the regulations set by the National Credit Act (NCA) when granting loans.
What do Private Lenders in South Africa Look at?
1. Your Credit Score
This is the most influential factor. Your credit score tells lenders how risky it is to lend to you.
- High Score: If you have a history of paying accounts on time, lenders see you as low risk.
- Lower Score: If you have missed payments or have a lot of debt, lenders see higher risk.
2. The Loan Term
How long you take to pay back the loan matters.
- Short-term loans: These are often paid back over a few months. Your affordability also impacts your loan term.
- Long-term loans: Paying over several years might lower your monthly instalment, but you will pay more interest in the long run.
3. Affordability
Lenders must check your income versus your expenses. If you have plenty of disposable income, you are a safer bet. If your budget is tight, the risk is higher.
The Importance of Transparent Lending
In this scenario, where numbers can be confusing, transparency is king. You should never sign a loan agreement if you don’t understand exactly how much money will leave your bank account every month.
At Atlas Finance, we prioritise this clarity. We believe a good loan is a responsible loan. When you apply with us, we look at more than just a number on a screen; we assess your affordability to ensure you aren’t over-indebted. We lay out all costs, including interest, fees, and insurance, upfront with you. There are no hidden surprises.
