Borrowing money from a loan shark might make your festive season brighter but you will be paying for it for a long time to come.
This warning comes from Emma Mer, CEO of FNB Personal Loans, who says taking money from unscrupulous lenders is a poor decision to make.
“It’s easy to get lost in the festive season excitement and to end up making financial decisions that will be costly over the long term. One of these is borrowing from a loan shark to finance festive season expenses.
The best approach is to save, or to borrow money from a legitimate financial services provider.
“The reason for this is simple – loan sharks operate outside the country’s laws that govern the extension of credit.”
One of the major issues to be aware of is that borrowing from a loan shark can come with incredibly high interest rates which are often beyond what the law allows.
That is why it’s important to rather approach a trusted provider that will help you achieve your festive season goals without bending the rules, says FNB.
When borrowing from credible financial institution such as a bank, a thorough financial assessment is done, the purpose of which is to determine your individual interest rate and the amount that you qualify for. The main goal of this process is to lend consumers what they can afford.
Here are some benefits of borrowing from an authorised lender:
* The process is transparent and there is a formal contract in place which stipulates the terms of the loan;
* You are provided with a quote should you qualify for a loan;
* You have an option to choose the payment period that is suitable to your financial position and needs;
* You are provided with loan account statements on an ongoing basis, stipulating fees and related debt servicing costs;
* You do not have to sacrifice your ID or bank card as security and this safeguards you against identity fraud.
“These are very important issues to consider as a loan should help to empower and enable you,” says Ms Mer.
“It’s important to spend wisely and then consider a personal loan to top up or to help you do the things that will benefit you in the long run, and that you would not otherwise be able to do. These could be supplementing education savings, doing home renovations or being able to take up a great travel deal even if you haven’t had time to save for it.”