The 2018 Guide to Personal Loans

The 2018 Guide to Personal Loans

What is a personal loan? fast cash

A personal loan, also referred to as an instalment loan, is an advance of credit from a lender typically over a period of 2-6 months. The loan is repaid via several pre-scheduled payments across the duration of the agreed loan period. Typically, personal loans last for up to 6 months with a maximum loan amount of R4000 for new customers. However, this will vary based on your provider.

Is a personal loan different from a payday loan?

Yes, there are key differences between these two types of loans. Wonga currently offers a payday loan, which is suitable for when you require finance for a shorter time period of minimum 4 days up to 6 months. Personal loans are typically paid in instalments over the loan period. If you require access to your loan for longer than this, then a 6 month instalment loan may be perfect for your needs. Wonga currently provides this type of loan product.

Advantages of a 6 month personal loan

You can typically apply for a personal loan online. The application process is simple, can be done using your laptop or smartphone, and usually only takes a couple of minutes to complete.

Depending on who you take out your loan with you will encounter varying degrees of flexible repayment periods, which means you have greater control in creating a payment plan that works for you. Most ‘instalment loans’ are repaid through 6 monthly payments, which allows consumers to create a manageable monthly budget as you’ll know exactly how much you’ll need to repay and when it’s due.

Is a personal loan right for you?

  • Personal loans are not suitable for use as solutions to long term financial difficulties.
  • Personal loans are not intended to be used to manage existing debt.
  • Late repayment of any loan will likely incur an extra cost to you and may negatively affect your credit rating.
  • Only take out a 6 month personal loan if you are confident you can comfortably repay the full amount on time on the agreed repayment days.

How do interest rates work for personal loans?

Interest rates on personal loans can be lower than those offered on classic short term loans like Wonga currently offer. This is due to the loan amounts typically being larger and the period of repayment being much longer than a traditional short term loan.

Can I repay my personal loan sooner than the 6 month period I originally selected?

This will depend on your loan provider. Wonga operates a policy that actively encourages early repayment on loans to help customers avoid paying too much interest, however this may not be the case for your instalment loan provider. We recommend confirming early repayment conditions and terms directly with your provider before committing to anything.