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What valuable possession could you do without if you needed to borrow money? That's the question to ask yourself if you ever consider taking out a secured loan.
According to Business Day, Capitec Bank's total personal loan book value is over R40 billion since 2016, with Standard Bank and African Bank not far behind with the second and third largest personal loan books respectively. In a tough economy, it's no surprise so many South Africans are getting financial assistance. If you need a little extra financial help and are looking at personal loan quotes, have you considered a secured loan?
| Category | Details |
|---|---|
| Definition | A secured loan requires the borrower to offer an asset, such as a car or property, as collateral. This asset secures the loan until it is fully repaid, at which point the borrower regains full possession. |
| Legality | Secured loans are completely legal. Lenders take a calculated risk by lending money and may initiate repossession if the loan is not repaid and there's no insurance on the loan. |
| Advantages | - Lower lender risk, allowing for larger loan amounts. - Longer repayment periods are often available. - The lender does not take physical possession of the asset during the repayment period. |
| Disadvantages | - The borrower risks losing a valuable asset if unable to repay the loan. - Example: A student using a car as collateral for a study loan risks losing the car if unable to repay. |
| Practical Note | Using loans wisely can alleviate financial pressure. For those looking to compare personal loan options (unsecured), tools like comparison websites can provide quotes quickly, helping borrowers make informed decisions before committing. |
Prices quoted are correct at the time of publishing this article. The information in this article is provided for informational purposes only and should not be construed as financial, legal, or medical advice.