Consolidation loans up to R350 000
Reduce your monthly payments by consolidating your loans. If you are having trouble keeping track of your monthly bills and payments, loan consolidation could be your answer.
- Low interest rates
- Quick loan offers and payment
- Free application without commitment
Loan Consolidation Meaning
Consolidation simply means combining all small loans together and taking a larger loan to pay them off. Authorized banks and lenders offer loan consolidation services regulated by the South African National Credit Regulator (NCR). A reputable institution will adhere to the standards and rules laid out by the NCR and the National Credit Act (NCA) of 2005.
A loan consolidation loan won’t rid you of your loans immediately, but it will make it easier to manage your payments. Also, because you are paying interest on one loan—instead of several—you will be paying less interest overall. If you are overwhelmed with managing your loans, this is a way to simplify the process and give you peace of mind.
Benefits with Loan Consolidation
- Only one monthly repayment
- Lower interest rate
- Easier to manage your economy
Who Can Apply For a Loan?
- You are over 18 years old
- You are employed and employment has lasted for more than 6 months
- Your loan should not be more than 8 times larger than your monthly income
Loan Consolidation: Fees & Charges
When you apply for a consolidation loan you will be paying an initiation fee and service fee. Initiation fees will vary depending on the total debt and the number of credit agreements.
Service fees are charged for the day-to-day administration of your loan and are limited to a monthly charge of R60 plus VAT. This is set by the NCA.
In some cases, lenders require credit life insurance to cover the loan in the event of retrenchment, disability, death or dread disease. By and large, this also ensures that debt repayment doesn’t become a problem in times of crisis. Credit life insurance is capped at R4.50 for every R1 000 of the loan.
Short-Term Loans and Consolidation
A loan consolidation loan is a short term loan for a fixed amount. Repayment terms of the loan are usually between 18 and 72 months, based on your risk profile. You repay this loan in equal instalments over an agreed period of time with a fixed annual interest rate.
Loan consolidation is a way to refinance when you are dealing with overwhelming debt, letting you combine all your short term debts such as credit cards, store cards and personal loans. And, consolidation loans do not require collateral.
If you only have several small debts and want to simplify your monthly payments, you could apply for a personal loan. This would let you settle the debts, leaving you with one affordable monthly payment.
Interest Rates On Loan Consolidation Loans
In order to qualify for loan consolidation, you will need to show your ability to pay and meet the company’s requirements. Moreover, the terms you receive will also be based on your credit score and risk profile.
Loan consolidation won’t affect you credit score negatively unless you miss a payment. And, with only one monthly payment, there is less likelihood of that happening.
Keep in mind, that consolidation loans are only practical if the new interest rate is lower than the interest rates on your current loans. When you consolidate, a lower interest rate isn’t always guaranteed. Therefore, before you apply for a consolidation loan, it’s important to compare the interest rates on new and existing loans.
You can consolidate debt in two ways. Firstly, when you have met the qualifying requirements and the loan is approved, lenders add the funds to your bank account and you settle the debts.
Or secondly, when the financial institution settles your debts directly. But, before that can happen, you will have to give them settlement letters from your creditors.
Loan Consolidation
Refinance
When you decide to refinance your debts and you are applying for a new loan, it could negatively affect your credit score by temporarily lowering it.
When you refinance, lenders always look at your credit history and credit score. This is a hard inquiry on your credit report and it will cause a slight dip, although this is temporary.
Since you will want the best interest rate, you may apply to multiple lenders. Several hard inquiries over a short period of time–14 to 45 days—will show as a single inquiry. In order to minimize any impact on your credit rating, it’s better to do your applications at the same time.
This solution also applies to secured loans. You can refinance home and vehicle loans for better interest rates. For example, refinancing will let you move an adjustable-rate mortgage to a fixed rate mortgage.
Before you apply for loan refinancing you will need to compare interest rates, monthly payments, extra fees, and the total cost of the loan.
Debt Review
Debt review is when you put your debt negotiations in the hands of a Debt Counsellor who will collate your debts, and examine your income. Together, you and your counsellor work out a payment plan based on your interest options and instalments with your creditors. Your Debt Counsellor will handle the negotiations with all the creditors on your behalf. The object is to make your debt manageable and protect you from creditor harassment, asset repossession, and legal action.
About Arcadia Finance
Easily secure your loan with Arcadia Finance. Application won’t cost you anything, and you can choose from a selection of 10 trusted lenders. Each lender follows the regulations set by the National Credit Regulator in South Africa.
Consolidation Loan Application Online
Requirements to Apply for Consolidation Loans
- The details of the bank account where your salary is paid.
- Three months of latest bank statements or payslips.
- A clear copy of your ID document.
- A current document confirming your residential address.
In conclusion, remember that a good credit record is your first requirement.
Consolidation Loan Calculator
By using loan calculator, you can easily calculate monthly expenses, loan terms and other fees that will apply to your consolidation loan. Additionally, this information lets you compare lenders and loans, and find the best offer for your individual situation.
Frequently Asked Questions
A consolidation loan combines multiple debts into one larger loan, allowing you to make a single monthly payment instead of juggling multiple loans. This simplifies debt management and may reduce your interest rates and monthly payments.
Unsecured loans such as credit cards, store accounts, and personal loans can be consolidated. However, secured loans, like home or vehicle loans that use collateral, cannot be consolidated through this method.
Benefits include a single monthly payment, possibly lower interest, and easier debt management. However, total costs might increase if repayment terms are extended.
Initially, your credit score may dip due to credit checks. Over time, regular payments can improve your score by reducing credit utilization.
Yes, you may face initiation and monthly service fees. Additionally, some loans require credit life insurance.
