Never take a personal loan

[Serious_Python]

I've never seen a bank pretending to be a charity case. Nobody is forcing you to buy that expensive house or car. Also, nobody is forcing you to accept credit.

Would you lend money and not expect some sort of return?

On the high cost of personal loans, these are generally uncollateralized. This means the bank is taking on greater risk and is expecting a greater premium.

If you deem the cost of credit to be too high, don't take it.

All banks market their "interest in and dedication to" helping you. It forms the basis for most of their campaigns. ("How can we help you", "Simpler, better, faster", "Today, Tomorrow, Together" - You get the idea)

Your phrase "nobody is forcing you" is naive. Everybody needs a roof over their head, everybody needs transport to and from work. I am talking about the relative pricing of goods, even the cheapest piece of crap "new" car is overpriced for what it is, compared to its actual cost. So yes you are forced.

Lending money to people and expecting a return is unethical and immoral. (That was a joke, why would you even ask a question like that?)

The issue of charging interest is not in dispute but rather the extent to which the banks unfairly charge "profit" interest, but then again, how big a profit is a fair profit, but then again when has fairness ever been part of the banking systems profit considerations? - We can argue all day but there is no point it is what it is...

The above applies to the cost of personal loans too, I know how they are structured and how they work, doesn't mean it is ok for them to charge what they charge.

As for your last comment, naive. People can't always choose when they will need credit and for what purpose. It is not always for material things either.

 

[Devill]

Did a quick count on a R50 000 personal loan from nedbank @ 23%, I have made 8 payments of 1917.74.
Total Payed 15341.92

Total off Capital - R4500

#$%# ridiculous

I hate you PERSONAL LOAN 23% my ass

WTF?! 23%?!

My credit card limit is close to that and I only pay 16%.....

 

[Mike Hoxbig]

Dude IIRC you were warned about this, but insisted that you had no other choice

 

[DrewChan]

Dude IIRC you were warned about this, but insisted that you had no other choice

I know Mike - I am fully aware that all of this is completely my fault - but banks still rip you off - work out my repayments vs capital paid off - that is NOT 23%

 

[Turbo_Aspiration]

All banks market their "interest in and dedication to" helping you. It forms the basis for most of their campaigns. ("How can we help you", "Simpler, better, faster", "Today, Tomorrow, Together" - You get the idea)

Your phrase "nobody is forcing you" is naive. Everybody needs a roof over their head, everybody needs transport to and from work. I am talking about the relative pricing of goods, even the cheapest piece of crap "new" car is overpriced for what it is, compared to its actual cost. So yes you are forced.

Lending money to people and expecting a return is unethical and immoral. (That was a joke, why would you even ask a question like that?)

The issue of charging interest is not in dispute but rather the extent to which the banks unfairly charge "profit" interest, but then again, how big a profit is a fair profit, but then again when has fairness ever been part of the banking systems profit considerations? - We can argue all day but there is no point it is what it is...

The above applies to the cost of personal loans too, I know how they are structured and how they work, doesn't mean it is ok for them to charge what they charge.

As for your last comment, naive. People can't always choose when they will need credit and for what purpose. It is not always for material things either.

Fair enough about the marketing.

The cost of cars and houses is not the issue here. The issue is credit. What I meant was you don't need that "new" car or fancy house. It's about what you can afford.


How is expecting a return on taking risk immoral or unethical? What incentive do you propose for banks to lend money? Again would you lend money without expecting anything in return?

If interest was the cost of credit, the same argument can be moved to any business. How much profit is too fair? I don't think that question fits well in our capitalist-biased economic system and, as you mention, fairness is not part of a capitalist system.

Again, if credit is the only thing supporting your lifestyle (ie you feel you cannot choose), you are living above your means.

 

[TJ99]

All banks market their "interest in and dedication to" helping you. It forms the basis for most of their campaigns. ("How can we help you", "Simpler, better, faster", "Today, Tomorrow, Together" - You get the idea)

Your phrase "nobody is forcing you" is naive. Everybody needs a roof over their head, everybody needs transport to and from work. I am talking about the relative pricing of goods, even the cheapest piece of crap "new" car is overpriced for what it is, compared to its actual cost. So yes you are forced.

Lending money to people and expecting a return is unethical and immoral. (That was a joke, why would you even ask a question like that?)

The issue of charging interest is not in dispute but rather the extent to which the banks unfairly charge "profit" interest, but then again, how big a profit is a fair profit, but then again when has fairness ever been part of the banking systems profit considerations? - We can argue all day but there is no point it is what it is...

The above applies to the cost of personal loans too, I know how they are structured and how they work, doesn't mean it is ok for them to charge what they charge.

As for your last comment, naive. People can't always choose when they will need credit and for what purpose. It is not always for material things either.

No, I think he meant that no one is forcing you to buy a NEW car, ever. Get a second-hand, well maintained one for a fraction of the cost. In fact with SA's ludicrous car prices you really are stupid if you do buy new, even cash prices are a massive rip-off.

As for not spending money on "material things", what else can there be? How can you spend money on imaginary things? :wtf:

 

[Stefanmuller]

Mine is 13% at ABSA on R50k, they dropped it to 12% after taking an additional R10k. I don't have any bonds or never had a car loan but do have a quite large student loan I'm paying off. Weird how it works. Just stay away from Direct Axis though. They will gladly give you a loan but they quoted me 26%.

 

[akescpt]

Yeah...personal loan is one of the worst financial choices you can make, bar getting married which costs you even more, you must have really needed the money badly to have taken one.

took a 12k when i got married...financial mistake..took ages to pay..eventually just finished the rcp off...rcp's are from the devil. just tore up a 75k loan offer from woolies...cheq!

 

[Serious_Python]

No, I think he meant that no one is forcing you to buy a NEW car, ever. Get a second-hand, well maintained one for a fraction of the cost. In fact with SA's ludicrous car prices you really are stupid if you do buy new, even cash prices are a massive rip-off.

As for not spending money on "material things", what else can there be? How can you spend money on imaginary things? :wtf:

Even Second hand cars are a rip off. Better priced than new but still a rip off.

I sense you're taking the piss, maybe you borrow money to pay for your dying mother's cancer operation.... or.... maybe you opt for the 66" HD LED home theater instead supposing she's done for anyway.

 

[DrewChan]

Yeah...personal loan is one of the worst financial choices you can make, bar getting married which costs you even more, you must have really needed the money badly to have taken one.

It was a pretty car ^_^

350z next woohoo - well once I clear the remaining R12000

 

[Serious_Python]

Fair enough about the marketing.

The cost of cars and houses is not the issue here. The issue is credit. What I meant was you don't need that "new" car or fancy house. It's about what you can afford.


How is expecting a return on taking risk immoral or unethical? What incentive do you propose for banks to lend money? Again would you lend money without expecting anything in return?

If interest was the cost of credit, the same argument can be moved to any business. How much profit is too fair? I don't think that question fits well in our capitalist-biased economic system and, as you mention, fairness is not part of a capitalist system.

Again, if credit is the only thing supporting your lifestyle (ie you feel you cannot choose), you are living above your means.

The cost of everything you can't afford to buy without credit is the issue. Be it car, house or 66" LED TV.

I did say I was joking - I should have put a comma in and avoided the confusion, apologies. (I actually did put the comma in....)

Some people living in constant debt do not always get there by simply "living beyond their means". Life happens.

 

[TJ99]

Even Second hand cars are a rip off. Better priced than new but still a rip off.

I sense you're taking the piss, maybe you borrow money to pay for your dying mother's cancer operation.... or.... maybe you opt for the 66" HD LED home theater instead supposing she's done for anyway.

Operations are very much a part of the material world. Ok I guess you meant luxuries then. Emergency medical expenses would be a case where loans might be warranted, as Turbo mentioned.. But buying things you don't absolutely need to survive, on credit is generally a bad idea. Banks are like casinos, the house always wins, and those ads are mainly there to lure suckers into thinking they can afford stuff they really can't.

If you want a new TV etc, you gots to save, or get over it.

 

[Fuma]

Not only risk profile. If you earn below 30k your interest is about 5% higher then someone else who earns above 30k.

Can you re-negotiate your interest rate (for a bond though) if you are earning R10k more than when you got the bond?

 

[Serious_Python]

Operations are very much a part of the material world. Ok I guess you meant luxuries then. Emergency medical expenses would be a case where loans might be warranted, as Turbo mentioned.. But buying things you don't absolutely need to survive, on credit is generally a bad idea. Banks are like casinos, the house always wins, and those ads are mainly there to lure suckers into thinking they can afford stuff they really can't.

If you want a new TV etc, you gots to save, or get over it.

Too True!

 

[DrewChan]

My general opinion on this:

If you really want something and it will in no way bankrupt you get it, credit is fine if repayments are well within your means, unfortunately, credit is usually taken by those with a really low income bracket and it becomes a vicious cycle.

I can only now - easily come out in a month - I was previously in a pretty horrendous situation.

 

[Serious_Python]

and a lot of the time people are extremely embarrassed or ashamed of their financial situation, no matter how they got there.....

This prevents them from trying to find a better way or seeking help.

 

[Kosmik]

Sometimes you just need the money so bite the bullet and pay, or pay off as soon as possible.

 

[D3x]

Can you re-negotiate your interest rate (for a bond though) if you are earning R10k more than when you got the bond?

Bond interest rates are negotiable already at 6 month's after the bond was registered. I think this also depends on your profile but I know its possible.