Debt Consolidation is one of the best ways to manage multiple debts. Essentially, a consolidated loan is a big loan awarded to qualifying clients with the intention of paying all current loans. This means you will not have to track multiple debts and pay varying interest for each of your loans. Instead, you will have one big loan with a well-defined interest rate that you can focus on. If you are considering taking a consolidation loan, read on to find out more about African Bank’s debt consolidation loan.
The African Bank
The African Bank is considered one of the leading institutions when it comes to providing personal as well as unsecured credit facilities to South Africans. For some people in the financial industry, it is even regarded as a reliable institution in the finance and banking industry in the region. This is why it is a good idea to consider it as a debt consolidation partner. This service is much needed as Business Day reports that the debt level increased after the financial crisis.
The bank boasts itself for transparency when it comes to their lending practices and policies as well as being able to offer quality products when it comes to credit needs of South Africans. The company also shows how much they value their customers by providing top of the line professionalism and care for each and every one of their customers.
Debt Consolidation Loans by African Bank
The bank ensures that their services are designed around the needs of their consumers. They offer a flexible degree of flexibility especially when repayment options, as well as the total loan amount, is being talked about. South Africans who are looking to consolidate a large amount of debt can borrow up to R180,000 collateral-free. Here are some of the benefits people can expect from the African Bank
- Personalized service
The bank has been in business for some time now. As such, they have acquired the necessary experience they need to understand the needs of their consumers. With this understanding, they are able to guide and provide the right kind of services to people. This personal attention to each individual also means a quick turnaround even from simple inquiries.
- Loan approval
If you are looking to borrow money for debt consolidation, the African Bank has a high approval rate. This increases your chance of getting a nod on your loan application and on the road to financial freedom. The bank also prides itself on fast service as the cash transfer is also a quick process.
- Repayment schedule
The personalized approach to banking and lending also extend well into the bank’s repayment process. For one, they are able to offer 5 years as the maximum repayment time-frame. It might not sound too much but in it is a big help. This helps you pay less in interest over time. This also helps you finish your payments at a faster rate. Debt consolidation loan payments can also be personalized making it an easy process.
Why You Should Take a Debt Consolidation Loan
Debt is helpful. It is a significant leg-up to start-ups as well as a boost to on-going small businesses. To individuals, a loan is helpful for purchasing assets and meeting your other spending needs. But being indebted is a slippery slope. It can get very ugly very fast. If you are deep in debt, with multiple credit providers, there are two options for reliable debt management. These are debt counselling and debt consolidation.
Debt counselling was introduced in South Africa through the National Credit Act in 2007. It allows you to get expert debt advice while having recognition as being “under credit review” by stakeholders in the credit sector.
Debt Consolidation, on the other hand, is when you take out a loan to pay off all your existing loans. With debt consolidation, you will only have one payment and one loan to worry about. However, it comes with the trade-off of having to pay a higher total cost.
If you don’t seem to have money available anymore, or you are having trouble paying bills each month, or you are afraid to answer unknown callers on your phone, then debt consolidation might be for you. Being indebted is stressful. But that is not the worst of it. Creditors often sell loans to other companies that harass you and add extra costs to your debt, even though these activities are illegal.
How Debt Consolidation Works
Debt consolidation pays off at least five collective loans using one new loan. It is a debt displacement strategy that can save you money in interest but sometimes will take longer to pay off. The reverse is also true, in addition to costing more.
There are two kinds of debt consolidation, secured debt consolidation and unsecured debt consolidation. Secured debt consolidation is a consolidation loan that requires you to give an asset up as collateral, while an unsecured consolidation loan uses your credit score to determine your creditworthiness. Unsecured loans are given without collateral.
How to Get the African Bank Consolidation Loan
African Bank Consolidation Loan is the debt consolidation loan offered by African Bank. It is an unsecured consolidation loan. To get access to this loan, you must fit the following criteria:
- You must have a South African National ID (in other words, you must be above 18 years of age).
- Have an income. For which you will have to provide your latest payslips, ideally, for the last three months.
- You must provide the latest statements for the bank account your income goes into. It is also best to provide this for the last three months.
- The bank only offers loan consolidation for a maximum of five loans. So make sure that your outstanding loans are five or less.
How to Apply
To apply, you can visit one of African Bank’s local branches or fill out a form on their website. By filling the form, the bank is able to get an overview of your current credit status. After the application, the bank will contact you to continue the process.
To keep your credit status in check, it is important even as you are looking at ways to settle your outstanding debts. Regularly request your credit report from the credit bureau. It is within your right to get one free credit report each year.
Costs for the African Bank Consolidation Loan
African Bank levies the following charges for a consolidation loan:
- Annual interest rate ranges from 15% to 24.5% annual percentage rate (APR)
- Monthly administrative fees of R69
- A one-off fee of R1197
You should note that all costs are inclusive of Value Added Tax.
Payment and Repayment Options
To pay any monthly charges or make an instalment to repay the loan, the bank offers the following options:
- You can use cash to pay at a local African Bank branch.
- You can also use a cheque to pay at walk-in branches.
- The bank also allows payments using stop orders.
- You can opt for payment using internet transfers by choosing African Bank as a beneficiary in an EFT transfer from your bank.
- You can pay by making debit orders. But ensure you have money when you do because there is a fine on failed debit orders.
- Having the money deducted directly from your income.
- The bank has a mobile payment you can access by dialling *120*255# and follow the prompts you get.
- You can also pay online at the bank’s website.
To make arrangements for repayment, call 011 207 4500 or 011 564 7200.
Benefits of Debt Consolidation
If you choose debt consolidation as your way out of debt, you’ll derive the following benefits from it:
- Foremost, debt consolidation will help you avoid bankruptcy if you are willing to consistently adhere to the payment schedule you get on the consolidated loan.
- Second, debt consolidation will offer you a way out of the turmoil of being over-indebted. At which point most people feel hopeless. They will give you a complete route to total debt freedom.
- A good debt consolidation strategy can end up in lower interest payments.
- Debt consolidation also minimizes the stress from debt payment because there is only one debt to worry about.
- You may end up completely paying off your debt sooner if you go with it. But this depends on the terms your bank offer you for repayment on the consolidated loan.
- Debt consolidation will also reduce the calls and letters you get from collection agencies. This lets you focus on other things and only look forward to one lender’s (your consolidation bank’s) monthly repayment.
- Paying a high initial principal or paying it sooner will reduce your interest rates going forward. If you can, you should.
- Finally, early principal payments also increase your credit score.
Benefits of the African Bank Consolidation Loan
- The bank offers a consolidation loan of up to R250,000
- Their interest rates start at 15% and top off at a 24.5% annual percentage rate. Considering it is a consolidated loan, the maximum is still very accommodating
- They offer flexible payment terms of payment to cover the loan. They offer between 12 to 72 months of payment.
- African bank consolation loan has credit life. Credit life is an assurance of payment relief or a complete write off in case you are rendered unable to pay as a consequence of death, retrenchment, or handicap. Credit assigns clients one of two categories: Category A and Category B. Category A is a full or partial cover for death, retrenchment or disability. Category B covers only death.
- They have a ‘Choose your break’ feature that lets you choose a month in which you take a break from payment. This feature can help you use the money on special occasions or in months when you might need funds for emergencies.
- The bank allows you to seek debt counselling from another independent debt counsellor to liaise with on your debt.
Shortcomings of the African Bank Loan Consolidation
- The bank has offerings for loan consolidation.
- The starting interest rate of 15% is relatively high.
Short Comings of Loan Consolidation
- In cases where debt consolidation is done using assets as security, there is a new risk of losing those assets.
- The new consolidated loan can add extra length to a mortgage payment, resulting in added years of payments.
- You need to ensure you don’t miss any payment. You now have one monthly repayment after debt consolidation; missing that is detrimental.
- Debt consolidation does not address the reason(s) you were indebted in the first place. The problem you had managing your finances before might still make it difficult to pay off the new consolidated loan. If you can opt for an independent debt counsellor to help you with debt management and debt solutions.
Being indebted shouldn’t spell doom for you or your business. Some of the most successful people have been seriously indebted before. But that is not an excuse to throw caution to the wind. Debt management is an important part of your financial plans and financial goals. Although the first best option in any management system is to get acquainted with what you are managing, the second-best option is to outsource the role to experts. One of the avenues to outsource debt management is debt consolidation. Make sure you choose the right debt consolidator. Pay attention to the interest rates, the loan amount as well as other rates. Ideally, finding out the total repayment (average outstanding balance) is best. It will give you a good idea of what you are getting in exchange for the benefits that come with loan consolidation.
Other services by African Bank
South Africans who choose African Bank will be able to work with a reliable and trustworthy credit institution. The bank not only offers debt consolidation but a host of other services as well. It is also dubbed as one of the leading institutions in short-term loans. However, the bank also provides debt clearance and debt financing in its list of services.
Debt consolidation can be a tricky and tiring process but the rewards are great. You just have to understand the program well. It is also ideal to find a suitable as well as a professional partner. They can help your journey to financial independence and freedom. If you want to know more consolidating debts, you can read it here.