Credit record, affordability key

A Fin24 user is looking for a way to pay off three loans and still have some money left as a deposit on a flat. She writes:

I had to take out three loans this year because of family emergencies. One in December from African Bank (which should be paid up by the end of the year) and two recently - one from Wonga and one from Capfin.

I am not in arrears with any of these payments and can afford them, but now I need to have a deposit as well for a flat rental.

I would like to get a long-term loan of a larger amount to settle these other loan balances completely and to have extra cash for a deposit on a flat, as I have to move in the near future.

Where can I get a long-term loan of about R20 000 for this? It would mean that I can pay all my loans and only pay off this one loan per month. I don't think debt consolidation would help because I still won't have enough for a deposit on a flat. I just want to clear everything once-off and only pay one loan.

Please advise.

Ian Wason of the Intelligent Debt Management Group responds:

In order to get a loan, two factors are taken into consideration. Firstly, you must have a good, clear credit record. This means that accounts must be paid regularly and not too many arrears on accounts.

The second factor taken into account is affordability. You need to be able to afford the loan you are taking out. The credit provider will look at your income and if they feel you can’t afford the loan, they won’t grant you one.

I suggest you go to a bank to try and get a larger loan. If they decline the request, it may be because of affordability, due to these two smaller loans.

Make sure these are paid up and then perhaps try again. You can also go to smaller microlenders instead of the big banks, but make sure the interest rates and fees are reasonable, otherwise the loan will end up costing you a lot of money.

You don’t really need a consolidation loan for R20 000, as a normal personal loan can be taken out for this amount.

- Fin24

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