Whether you want to buy a nicer phone, a comfier bed, a better car or a bigger house, loan offers additional cash to buy an asset or supplement your capital. However, you need to manage your loans well to avoid getting into trouble. One of the best ways to manage loans is loan consolidation. Essentially, when you consolidate a loan, you take a big, new loan to pay off all your outstanding loan balances. As a debt management strategy, it will definitely bring order to your monthly debt repayments while also possibly giving you a lesser overall interest rate.
First National Bank, known everywhere as FNB, is an industry leading, innovative, cross-platform bank that offers easily accessible loan services to South Africans. Their loan consolidation tool, known on their website as Credit Switch, has lots of benefits for potential and qualifying customers. Some of them are cross the board loan consolidation benefits; others are specific to the bank. In this piece, you’ll find out the most important facts about FNB Consolidation Loans (Credit Switch).
To apply for an FNB consolidation loan, you need to meet the following requirements:
- You must be a permanent SA resident and at least 18 years old
- Proof of residence using bills not older than three months old.
- Bank statements from the past three months
- Proof of income – ideally your last three payslips
Try their Loan Simulator
Customers can conveniently try out the free bond calculator to give them an idea of a home loan they could qualify for, subject to a full credit assessment. After that FNB will help its customers fill in a full application to get the home loan process underway. This is great for customers who want to be sure of their decisions before applying for a specific loan.
How Credit Switch Works
FNB Bank Consolidation Loan is an unsecured consolidation loan, which means you don’t have to give an asset up as collateral. Qualification for a secured consolidation loan depends on the estimated value of the asset used as collateral. The qualifications for an unsecured consolidation loan depend on your income, credit status, and your outstanding loans. This will determine your affordability. Affordability is whether or not you can afford to make the monthly repayments that come with your loan. You should expect, therefore, to be gauged on the basis of your salary.
Banks have a maximum limit for the number of loans they allow for loan consolidation. Although Credit Switch does not disclose the maximum number of loan they consolidate, the industry standard is 5 loans or less. Expect around 3 to 5 loans.
Qualifications for Credit Switch
FNB Bank will require that you meet the following criteria before considering you for the FNB Consolidation Loan:
- That you must be employed,
- Your salary should be paid directly into a bank account.
- You must be between the ages of 18 and 64, and
- That you must be a permanent South African resident.
An application for the consolidation loan will also demand the following documents:
- Your South African Smart Card ID or green bar-coded ID.
- Your latest payslip.
- Prof of residence within the last three months. Proof that must be in your name.
- Bank statement for the account your income is paid into. That should be for the 3 months is you are an FNB customer and 6 months if you are not.
Applications for the loan are either done online, at a walk-in FNB branch, by dialling *120*321# for cell phone banking or by calling the number, 087 730 5596. Alternatively, you can also talk to your private banker and get them to help you apply.
Why Consolidate with Credit Switch
In the first place, FNB Bank’s internet banking is user friendly. The bank let’s you manage your loan straight from their app, which you can download on Apple App Store, Google Play Store or Huawei App Gallery. On the app, you can keep track of your payments and check your credit status and credit health.
Adding the internet banking option to walk-in banks sets the bank up for a wide range of customers. If you are one of those customers who prefer sorting out such important things as loans, the bank has you covered with branches countrywide.
Also with FNB, you get the following rates (officiated by FNB from 1st June 2021 to 30th June 2021) on the post-consolidation Personal Loan:
- A maximum loan of R300,000
- A short term loan that goes up to 6 months and a loan term loan of up to 60 months. Short term loans get a maximum of 5% per month. Long term loans start from 12.25% per annum and up go to a maximum 24.5%.
- You can make added payments to the loan anytime without getting charged extra.
- Improving your credit health while using the bank will open up you up to an additional loan of up to R300, 000. An additional loan will not get charged an initiation fee. You track your credit health in the FNB App.
- They have a “Take A-Break in January” feature added to the loan repayment terms that lets you skip a repayment in January. You can still opt out and make the repayment.
- You get a compulsory “Credit Life Insurance” with a long term loan. Although, you can opt out of it if you instead get your own insurance. This protects you and your loved ones from financial difficulty in the event of disability, retrenchment or even death.
Charges for Credit Switch
Starting from 1st June 2021 to 30th June 2021, FNB Bank has officiated the following charges for their FNB Consolidation Loan:
- Once-off initiation fee – R1207.5
- Monthly service fee with credit agreements concluded since 6th May 2016 – R69
- Clients with credit agreements concluded between 1st June 2007 and 5th May 2016 – R57.5
- A 5% monthly interest for short term loans (1-6 months).
- An interest starting from 12.25% and maximizing out at 24.5% per annum for long term loans (1-60 months).
Repayment Methods for Credit Switch
The bank lets all loan customers to make repayments towards selling their loans using the following means:
- Making an ETF payment on the FNB App, at an FNB ATM, online or using cell phone banking.
- Creating a scheduled transfer using online banking or on the FNB App.
- Making a cash deposit at an FNB ATM or walk-in branch.
Benefits of Credit Switch
- Debt consolidation in general is a good debt management strategy. If you adhere to the term payments, it is an uncomplicated way out of debt.
- Credit Switch, like all other consolidation loans might result in lower interest rates.
- Credit Switch generally reduces monthly repayments by R1, 200 after consolidation.
- It gives clients emotional relief from numerous stressful monthly repayments.
- Credit Switch will free up time spent keeping up with numerous debtors and debt collectors. With the FNB app, you will be able to manage your debt sufficiently, leaving you with additional time to focus on other matters.
- Paying a higher initial principal or making payments sooner will lower your interest and result in a better credit score. Credit switch does not charge additional payments onto the agreed upon monthly repayments. With the FNB App, you can keep an eye on your credit score as you do.
- FNB App offers more debt solutions in addition to debt consolidation. There are pointers and tips on the app to help with dent management.
Drawbacks of Credit Switch
- Credit Switch will give you a longer term of payment compared to the longest term loan from your previous loans.
- In the long run, the loan will end up costing you more than the total outstanding loans you settle by loan consolidation.
- A good credit score is charged higher interests and monthly service fees. In such cases, the consolidated loan might with a higher interest than the previous loans combined.
- Consolidating credit card loans are tricky. Credit card terms sometimes include extra costs for loan transfers and lengthy loan periods. You might end up with additional costs if you consolidate a credit card loan. This might even defeat the purpose of loan consolidation if it makes the cost of consolidation is too much.
FNB Consolidation Loans offer customers who are indebted a consolidation loan that pays off all the other outstanding loans. Debt can be stressful financially and psychologically. With debt consolidation, you will learn the monthly financial burden and emotional stress.
The loan is unsecured personal loan. This means you will be considered for the consolidation based on your regular income, outstanding loans and credit status. Before the bank across your loan request, they first have to determine whether or not you can pay the monthly loan repayments.
The loan includes two features. One is the Credit Life insurance policy and two is the Take A-Break in January. The former is protects you in case you are rendered incapable of paying the loan by unfortunate circumstances. The latter lets you skip the repayment for January.
As an add-on, FNB Bank has adequate sent management on its app that can help you get your credit back in check. The app is intuitive and convenient for all other purposes including monitoring debt repayments and making those repayments.
Deciding on any kind of loan consolidation should be a well thought out process. Once you take out a consolidation loan, you cannot reverse it. Make sure you are certain about loan consolidation. Although taking out the FNB Consolidation loan will help you with your debt situation, weigh the benefits against the drawbacks. Also look at the cost of the loan over the long run before you decide.