As a responsible credit provider, FASTA takes a holistic approach to each application to ensure you are able to pay your loan back in full, on time and within the agreed terms.
There are many factors that influence our decision to lend someone money. To ensure you are prepared, here are some questions you should ask yourself before applying for a personal or short term loan.
1. Why do I need a loan?
If you need a loan to cover your everyday expenses, carefully consider how you will pay it back with your other monthly expenses. Think twice if you are looking for funds to spend on non-essential things. If you have a limited income or have lots of expenses with little disposable income, lending money may put you under unnecessary financial stress.
2. How much do I need?
There are different types of loans available to you, depending on the amount you need and the repayment terms you are able to meet. Some lenders offer short term loans for less than R500 while some offer larger sized personal loans up to R250 000. Ensure you do not apply for more than you need so that you can meet the repayment obligations you will be bound to in your credit agreement.
3. How long will I have to pay it back?
Usually, you will have to make your first repayment within 30 days of being granted the loan. Your loan agreement will specify the repayment terms and the date of the debit order that automatically collects your monthly instalment from your bank account. FASTA’s repayment terms are monthly over 1, 2 or 3 months.
4. How much will I pay in fees?
The ‘cost of credit’ depends on a number of factors including the lender’s service fees, interest rate, credit protection insurance and the repayment term (length of time you have to pay your loan back in). Your credit score also influences the interest rate – the better your credit score, the lower the interest rate will be. Make sure you know and understand what fees will be incurred when you apply for a loan.
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5. Can I afford the monthly repayment?
When you apply for a loan you can choose the repayment plan that works for you. Factors such as your income, expenses and available cash flow are considered before the lender approves the repayment plan for your loan. If the lender thinks you will be strapped for cash, your monthly repayment will be reduced or your loan application will be declined.
Always ensure you do not stretch yourself too thin by trying to pay your loan back too soon or agree to higher monthly payments.
6. Do I have a good enough credit score?
Before you apply for your loan it is always good to know what your credit score is. Most lenders only consider applications from people with higher credit scores.
If you do not know what your credit score is, our partner ClearScore will be able tell you what it is for free!
7. How will a personal loan affect my credit score?
Managing credit responsibly by paying back your loan on time and in full, within the agreed repayment term, will have a positive affect on your credit score. However, if you miss a payment or apply for too many loans within a short period of time will reduce your credit score.
There are five factors that are used when your credit score is calculated:
- Your payment history
- Your total amount of outstanding debt
- The length of your credit history (a record of your demonstrated ability to repay your debts)
- New debt or existing loans eg personal, home, vehicle
- Your credit mix (the number of and types of credit you have open)
Lenders take all of the above into consideration when you apply for a loan. So, it is important to understand the impact too many loan applications or missing a repayment will have on your future applications for credit. However, using credit responsibly will have a positive impact on your future credit applications.
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