Standard Bank Group is the largest lender in Africa with total assets of approximately R2.793 trillion. The bank offers indebted customers a loan consolidation option as part of their Arrears Management and Distressed Customer Solutions. The Standard Bank Consolidation Loan pays off a bunch of loans for approved applicants. The new loan will have an easier repayment schedule. In case you are considering the Standard Bank Consolidation loan, here is everything you should know.
How to Apply for the Standard Bank Consolidation Loans
Standard bank Consolidation Loans are only for applicants with a credit card loan, a vehicle loan, a home loan or a personal loan. Applications for the loan are done online or by cell phone call. All online applications are done through the email: firstname.lastname@example.org. The cell phone applications are done by calling 0860 111 400.
While you make apply for the Standard Bank Consolidation Loan, you should prepare the following documents:
- Your Republic of South Africa ID.
- Your contact details.
- Documents proving your residence in the country. A lease or rental agreement would be best for tenants. For home owner, receipts for bill payments will do.
- Your bank statement for the account that your income goes into. It should be stamped at a walk in bank just to be sure. It should also be for at least three months.
- Records of your loans. Although this might not be a requirement with the bank, it is a good idea to have them on standby just in case. The records might be help you follow the process and understand what is happening.
Note: Make sure you’re completely honest about the information you provide about yourself and your outstanding loans. Any misleading information that you provide will make the bank deny your request.
Criteria for Applicants
After your request for a Standard Bank Consolidation Loan is received, the bank determines your affordability. Affordability means how much you can afford to pay monthly. It is determined using your regular income, the loan obligations you present for consolidation and credit status.
The greatest determinant of affordability is your weekly, fortnightly or monthly income. From this the bank will know how much you can pay back each month. A higher regular income increases your chances of getting the loan. But the income is weighed against what the bank estimates your monthly repayment should be. They also let you estimate your repayment based on how much the loan you is using their online loan calculator.
The loan obligations you have are the next crucial determinant of affordability. If the total amount left to pay out all your outstanding loans is high, there is lesser chance that you will be approved for the loan. However, if you don’t get approval for a consolidation loan, you can always apply for debt counselling.
Your credit status is the least factor in determining affordability for any consolidation loan. Applicants for consolidation loans generally have a poor credit status. Nevertheless, a good credit status will improve your chances of getting the loan.
Types of Standard Bank Consolidated Loans
Standard Bank consolidation loans are currently only available for personal accounts. But if you have a home loan with them, the bank will allow you to consolidate that loan. Normally, there are two kinds of consolidation loans, secured consolidation loans and unsecured consolidation loans. Before you choose to go with either, you should know what to expect.
Secured consolidation loans require that you give property up as collateral. Taking a secured loan risks the property in case you default on the terms of repayment for your loan. The bank is allowed to auction the car, house, or any other property that is used as collateral to pay off a defaulted loan. But these loans come with lower interest rates, because the bank has added assurance that the loan will be repaid.
Unsecured consolidation loans, on the other hand, do not use collateral. The lender in this case will use your regular income or credit status as proof that you are able to pay your loan. Unsecured loans have higher interest rates because there is little assurance that you will pay out the loan.
Costs of the Standard Bank Consolidation Loan
- Standard Bank loans start from R3000 and go all the way up to R300, 000, including consolidation loans. The cost of the loan is distributed into monthly payments for the period of the loan term. So you should to make monthly repayments lasting anywhere from between 12 and 72 months.
- Additionally, a service fee of R69 is charged on the loan each month.
- There is also a once-off initiation fee that will cost you anywhere from between R419.75 and R1207.50. An amount inclusive of VAT.
- The interest rate charged on the whole amount loaned out is allowed a maximum of 24.75% (a regulation under the National Credit Act). And so depending on your credit score, your debt and your income; you should expect the interest rate to be around that price.
- Lastly, there is an additional annual percentage rate of 17.65% as per National Credit Act (NCA) regulations.
Pros of the Standard Bank Loan Consolidation
- 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. It offers you a way out of the turmoil of being indebted.
- Secondly, it will lower interest payments. This advantage often comes at the expense of longer duration of payment.
- Third, you will pay less each month.
- Due to the fact that debt consolidation lowers your monthly repayment, it also reduces the monthly financial stress you had before. It will give you emotional relief because of this.
- In some instances, you might end up completely paying off your debt sooner if you go with debt consolidation. If you can, you will pay a bigger monthly repayment.
- 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 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.
Cons of the Standard Bank Loan Consolidation
- To begin with, if you take an unsecured debt consolidation loan might not make a difference to your financial situation. This is due to the fact that the interests on unsecured loans are usually higher than on secured loans.
- Also, compared to the other loan obligations you consolidate, the new loan will have a longer term, meaning that you will be indebted for longer.
- A consolidation loan will generally cost more than all your loans combined, even though you pay lower monthly repayments. This is because you pay for a longer term.
- A consolidation loan may not reduce your interest if you have a good credit status.
- If you are consolidating a credit card loan, you might end up with additional costs. Low interest and no-interest credit card options might have transfer fees included if a customer transfers the debt. And in case the no-interest credit card debt has a limited period, you will end up paying more when the period is over. The rules surrounding your credit card loan might reduce the benefits of loan consolidation.
- 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. Standard Bank does not have debt counselling. If possible, find out how you can get help managing your debts.
- Debt consolidation leaves you feeling confident while still indebted. You need to be watchful not to think your debt situation is solved after your loan consolidation is approved.
- If you take a secured consolidated loan, you risk losing the asset you have as collateral. Consolidation loans that have assets as collateral put those assets at risk in case of defaulted payments.
Debt Care Centre
Standard Bank Debt Care Centre has been setup to help those in financial distress. They offer a number of debt relief solutions in the form of payment holidays or a debt consolidation loan.
A payment holiday is the temporary freezing of your monthly repayments on an account. This means that you don’t need to make the monthly repayment on the regular due date, but the account continues to accrue interest and charges. This is often used for credit card debt.
Why Consolidate your Loans?
Depending on your financial situation, debt consolidation is often the only answer to unmanageable debt payments. This will help customers keep up with their credit rating and fulfill their credit agreement.
Consolidating your debt with a loan at Standard Bank
Get a personal loan of up to R300,000 so you can start managing your debts. Standard Bank will provide a debt counselor to help tailor a unique and simple payment agreement from all the involved creditors. Your loan is insured so you are covered in the event of death, disability or sudden cutbacks.
Try the Standard Bank Loan Calculator
Using the standard bank loan calculator, customers can determine their loan repayment beforehand by simply typing in their desired loan amount and loan term in months. They are going to see the first date of payments along with its interest rates and fees. After reviewing the results, customers can ask if they qualify through a series of information requests. It’s pretty easy and quick.
Standard Bank Consolidation Loans are good option for you if you are considering loan consolidation as a means to manage your debts. The bank is a reliable long term partner. It is the largest bank in Africa. It is prominent and seasoned.
You must be sure you want to go with debt consolidation. Weigh the pros and the cons and decide if the pros outweigh the cons. Nit-pick further. Find out how much it will cost you in the long run. Debt consolidation is final, once you decide on a consolidated loan solution; your debt displacement options become limited.
Before you take out a consolidation loan, talk to a debt advisor so that you don’t end up making a bad choice. Although the information in this article gives you a rough idea what you’ll expect, expert debt management and solutions are the best way to sort your debt situation out.