The global financial crisis of recent years has exposed, in the most spectacular way the downfalls of credit and the dangers that come with having too much of it. Yet completely contrary to this, we live in a culture where debt is encouraged, and advertisers always present the attainment of a loan as the key to some sort of utopia, where you can afford all the other luxury items the same advertisers will market in the next commercial break. Yet the financial crisis revealed to us as South Africans, and as members of the global community, that far too many of us have been living above our means, and continue to get more and more entangled in the web of debt. The South African government, having become aware of this, put in place measures to regulate the apparent greed of the banking system, who in South Africa, were even prepared to give out loans to the poor at interests rates they certainly couldn’t feasibly afford. The National Credit Act was put in place to put banks and consumers in check to ensure that all loans issued were issued in accordance with the customers’ ability to viably pay that loan off without any difficulty, and most importantly, without the customer compromising on their other basic priorities.
A personal loan is an amount of money deposited directly into the customers banking account, that they may make use of for whatever purpose they deem fit. Unlike a car or home loan, which comes with very specific guidelines and regulations, a personal loan (as the name implies) is for the personal use of the customer meaning a lot less rules. The criterion to get a personal loan has therefore become a lot stricter. Firstly, you need to provide your latest salary slip, along with 3 months certified bank statements so that the bank can analyse how you have handled your account, as well as your average monthly costs to determine affordability. Along with your ID and personal particulars, you will also need to prove that you are credit worthy, which they determine by looking at your credit record. The higher your scoring, the better the terms and the greater the amount of money you will be granted by the bank. These measures help to ensure the financial safety of both banks as well as the customer.