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First-time personal loan application: How does it work?

Article provided by Nedbank

A personal loan could help you when you’re in financial need. Though the process might seem daunting, knowing how it works will make applying for your first loan easier.

Step 1: Determine what your financial need is

What do you need the loan for? Do you want to buy a second-hand car, do renovations or refurnish your home, consolidate your debt, or get cash to pay for unexpected expenses? A personal loan might just be the answer. 

Step 2: Choose the best loan option for you

Have a look at what is on offer, what you can afford, and what would work best for your current situation. You need to be realistic about what you can afford in terms of repaying the loan. To get an indication of how much you would have to repay on a loan you can use a loan calculator  or loan consolidation calculator. Make sure that you will be able to pay the monthly loan repayment amount before you start the application process. 

Step 3: Apply for a personal loan – what do you need?

To apply for a personal loan, you need to tick a few boxes in line with the Financial Advisory and Intermediary Services Act (FAIS) to protect you and the loan provider. This includes having a job and a valid South African identity card/document. When you apply, ensure that you also have the following documents with you: 

  • Your most recent payslip or a letter of employment if you are contract worker. 
  • Three months’ stamped bank statements. 
  • Proof of residence.  

Step 4: Repaying your personal loan

Once your loan application has been approved, the money will be deposited into the bank account you stipulated in your loan agreement. In most cases you will have to agree to a debit order for payment of your monthly instalment.

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