Absa Group Limited is one of the largest financial services groups in South Africa, with a wide presence in several countries across the African continent. ABSA bank provides personal and business banking, wealth and investment management, insurance, and debt services to South Africans.
One of their products is the Absa Debt Consolidation Loan designed to make monthly loan repayments easier for those who are having a hard time keeping up with different credit deadlines.
What is an Absa Debt Consolidation Loan?
If you’re finding yourself with financial difficulties in surviving the month with what little money left in your account, then you’re probably over-indebted or are nearing that situation. Luckily, there’s a way for you to manage debts better with the help of Absa debt consolidation loans.
The Absa debt consolidation loan can help you manage multiple loans simultaneously, by pooling them all into one big loan into a single monthly instalment. All your debts from other credit providers will be cleared and you’ll only deal with the consolidated loan from Absa. This debt product is made for those who are struggling to maintain their debt repayments from multiple lenders.
Absa partners with other financial companies to provide the best debt consolidation rates to customers. Aside from this, here are the important points to know about Absa debt consolidation loans:
- Loanable amount
The loanable amount is up to R350 000. Dependent on your monthly income.
Repayment period
The repayment period or loan term for ABSA debt consolidation loans ranges up to 84 months, so it’s very flexible and convenient to apply for.
Interest rates
Interest rates for Absa debt consolidation loans start at 17.5% which is one of the lowest offers among the biggest banks in South Africa.
Absa Siyasizana Programme
With the pandemic everyone is experiencing, Absa is extending its hand to clients through the Absa Siyasizana Programme. The programme is designed to provide short-term liquidity relief to customers who have been impacted by the pandemic, rendering them unable to commit to their debt obligations.
The program will be customized according to each customer’s circumstance to ensure they get the needed assistance based on their capacity.
If you’re currently enrolled with Absa’s credit card, home loan, personal loan, overdraft, or vehicle finance, you’re qualified for the Absa Siyasizana Relief Plan Programme. Check this first to see if you can get payment breaks and catch up with your monthly debt obligations. If the load is still too much to handle, then you can pursue applying for an Absa debt consolidation loan.
As a relief measure, this programme won’t cost you any additional administration fees. Just be patient when you apply for the programme since a lot of customers are also getting it. It will take an average of two weeks before you receive a response after submitting your request.
Absa evaluates every customer on their current financial situation to assess the best debt consolidation loan offer that they can provide. They won’t charge exorbitant rates to those who are already having difficult time managing debts, but they also won’t just give the lowest rates possible to customers who have a bad credit history.
Requirements
To apply for an Absa debt consolidation loan, you must satisfy the following conditions first:
- You must be a South African citizen at least 18 years or older.
- You’re earning at least R2 000 per month.
- Here are the documents and other requirements you need to submit upon application:
- South African ID or Smart card.
- Proof of residence using bills not older than three months old.
- Bank statements from the past three months showing where your payslip is regularly deposited.
- Last three payslips you received.
Application Process for the ABSA Debt Consolidation
To apply, you can visit Absa’s official website or go to the nearest branch in your area. You must bring all the required documents with you to avoid the hassle of going back to the branch in case you miss something.
Unlike other loan providers that will take days to give an answer on your application, Absa will give you a decision within 72 hours.
Reviews and Testimonies
Absa is a reliable bank that’s easy to talk to when it comes to debt consolidation loans. They have a friendly staff that will assist you with everything you need to know about the debt instrument. They’ll also advise you with the best course of action to take to better handle your finances.
However, there are also a few negative reviews on their service.
According to a few customers, Absa declined their debt consolidation loan applications without supplying any reason to support the verdict. To add insult to injury, their applications were rejected even though the customers claimed to have good credit standing.
The said cases are rare though since the general perspective of South Africans regarding Absa debt consolidation loans is good.
Tips When Applying for an Absa Debt Consolidation Loan
Here are the top tips to remember when applying for a debt consolidation loan:
- Call your bank
Talk to your bank officer to see if you’re getting the best rates on your debts. If you’re transacting with a single bank for loans and credit cards, you may want to ask for an all-inclusive loan repayment fee option that’s more manageable to handle. You can save on transactional charges with this option since you’ll avoid paying multiple fees for repaying separate debts.
- Consider other methods first
Only consider applying for a debt consolidation loan when you’ve exhausted all other options and squeezed every corner you can to save more money to pay for loan repayments. Cut on unnecessary expenses first and see if that will be enough to cover all your monthly debt repayments.
It’s easy to get lured by how debt consolidation loans make monthly repayments lower and more convenient. However, in exchange for their advantages, you’ll have to deal with longer repayment terms that will eventually cost you more in the long run.
If you’re only after the convenience of managing multiple loans, it’s better to look for alternative methods to quickly repay your debts.
- Shop for the best rates
When taking a debt consolidation loan, you’ll most likely be required to get credit life insurance. Rates for the policy usually start at R3 for every R1 000, so if you’re applying for an R30 000 loan, expect an additional R90 on your monthly repayments for insurance.
Aside from the insurance premium, you’ll also have to deal with the monthly service fee and the one-time initiation fee. Consider these fees when you’re consolidating debts to assess whether the move is worthwhile to pursue.
For interest rates, make sure that the offer on the consolidated loan doesn’t exceed the highest interest rate among your current loans. For example, if you’re paying 15% on a credit card, 20% on a personal loan, and 25% on a payday loan, the best rate for the consolidated loan should not exceed 25%. However, the rate will still heavily depend on your credit rating.
Pay off debts quickly
When you take an Absa debt consolidation loan, make sure you pay it off as quickly as possible. Interest rates will be lower, but you shouldn’t be too relaxed because of the lower monthly repayments. Always find a way to pay more than the minimum required, so you wouldn’t have to deal with bigger costs in the long run.
Aside from seriously budgeting your expenses, make sure to reduce your personal limit when using credit cards and overdraft facilities. Never spend more than you can repay to avoid over-indebtedness.
The best way to avoid debts is to save more money and hold off buying things that you can afford to pay in cash.
Tips on Debt Management from Absa
Although Absa provides a way to consolidate debts, they still advise customers to practise smart financial management by reiterating the following tips:
- Pay extra into your loan repayments every month. Even a small amount can have a significant impact on lowering your debt in the long term.
Absa recommends that you follow the two popular strategies in repaying debts: the snowball and the avalanche methods.
The snowball method lets you focus first on smaller debts that you can pay off faster. You must put in the minimum monthly repayment required of each of the other debts. The concept behind this is to build up your confidence in tackling larger debts by letting you manage smaller ones first.
The avalanche method works the other way around. Your focus will be on bigger debts that have the highest interest rates, so you can minimize the interest accumulated in the long term. As with the snowball method, allocating enough to pay the minimum monthly repayment required on the other loans is recommended.
- Save at least three months’ worth of living expenses (and debt repayments, if there are any), so you’ll have a backup fund in case unforeseen circumstances occur.
- Manage your budget more efficiently by identifying your financial goals and monitoring your spending habits.
Contact Details
If you have questions or concerns regarding Absa debt consolidation loans, you can contact them through the following channels:
- Email: absa@absa.co.za
- Telephone: 0860 000 786
Final Thoughts
Absa debt consolidation loans provide an easier way to manage multiple loans at possibly lower interest rates. However, this type of loan must not be abused just to make repayments more convenient to juggle. Along with the lower monthly repayments is a longer repayment term, which when computed, will cost you bigger in the long term.
A debt consolidation loan is designed for those who are having financial challenges in keeping up with monthly repayments. Unless you’re experiencing this circumstance, it’s best to avoid consolidating debts and find other methods to repay your loans more efficiently.
