Loans and other operations for borrowing money are quite popular among the population of many countries of the world and South Africa is not an exclusion. However, there are types of loans that are difficult for an ordinary person to understand.
One of such specific types of loans is secured loans. To understand its features, you need to know the secured loans definition. A secured loan means one of the forms of a commodity loan. In it the goods that the lender purchases for you is his property until the client fully repays the cost of this product and annual interest. Payment is made in installments and if a person cannot pay off the debt, the creditor takes the goods for himself.
What types of secured loans exist?
Here are two most popular types:
- Loan secured by real estate
A loan secured by something valuable is a kind of guarantee for the bank that it will not incur losses if the person cannot repay the loan or does not fulfill all the terms of the agreement.
For example, when a person wants to take out a mortgage, his home becomes such collateral, which the bank, in this case, selects for the return of borrowed money. The secured loans against property South Africa allow you to borrow a substantial amount from a bank without presenting proof of income.
- Loans secured by cars
Car loans are the same service as mortgages. The bank provides you with a loan for the purchase of a car and in case of non-fulfillment of the agreements specified in the contract, he can take it back. The size of these secured personal loans varies depending on the value of the vehicle.
Why is a secured loan attractive to people?
The most important advantage of a secured loan over an unsecured one is the lower interest rate. That is, under equal other conditions, a person will eventually pay the bank a lower final amount.
Other benefits include:
- long-term installment plan;
- issuing a large amount in cash;
- lack of a guarantor;
- low percentage rate;
- possibility of obtaining a loan for a person with a bad credit history.
The secured loans without proof of income South Africa are especially relevant when a person is going to start a business with the help of a loan and start earning money then.
What do you need to consider in order to get a loan secured by real estate?
Before settling on a bank, you need to make sure that it is not a fraudulent organization. Check its availability in the registry, read reviews on sites. Some scammers may create secured loans South Africa agreements to fraudulently obtain the borrower’s property. When you come to the company, carefully study the contract and the terms of the loan.
To get cash loans secured on property, you need to have the following documents with you:
- taxpayer identification number;
- passport of a citizen of the country;
- certificate confirming that you have no debts for utility bills;
- passport and spouse identification number (if the borrower is married).
However, some restrictions may prevent you from obtaining a loan secured by real estate. You will be denied secured personal loans South Africa if there are minor children registered on this property.
In the case of a successful loan, you can receive an amount that is up to 70% of the cost of the mortgaged apartment or house.