Personal Loan

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Mavix

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Hi guys,

Long story short my car needs an engine overhaul and to do that I need to take out a loan. I went to FNB today to find out about a personal loan of around R15 000. The lady worked out that I would end up paying R920 over 36 months. I worked out that that equals to 61% interest. Can someone please tell me what they are smoking so I can get some too??:wtf:
Is there any other option? I imagine that most other banks would give similar ridiculous rates. She said I can also pay it off over 12 months. Which works out to 40% interest...
Any help would be appreciated.
If it makes any difference I'm 20, been working for a year and I am in a fixed contract.
 
Mavix said:
Hi guys,

Long story short my car needs an engine overhaul and to do that I need to take out a loan. I went to FNB today to find out about a personal loan of around R15 000. The lady worked out that I would end up paying R920 over 36 months. I worked out that that equals to 61% interest. Can someone please tell me what they are smoking so I can get some too??:wtf:
Is there any other option? I imagine that most other banks would give similar ridiculous rates. She said I can also pay it off over 12 months. Which works out to 40% interest...
Any help would be appreciated.
If it makes any difference I'm 20, been working for a year and I am in a fixed contract.
Click to expand...

yip the interest is frighting, can't a relative help out?
 
Maybe try Capitec? The shorter the time period you pay it off over, the lower the interest rate will be because its less risk for them.
Somewhere in the middle should be a good balance of interest vs time and cost.

Short term loans are always crazy. A much better option would be to finance it out of your home loan, or perhaps get your credit card limit upped to 15k and repay it at their lower interest rate.
 
The problem with a personal loan is that it is unsecured, therefore the interest rate is about 18% p.a. as the bank is carrying more risk. The best option is to look what type of overdraft you can get or look at a micro-loan like capitec.
 
The banks will always charge you crazy rates unless you negitiate.
ask them about their revolving credit loan or maybe check with directaxis.
shop around !
 
Mavix said:
Hi guys,

Long story short my car needs an engine overhaul and to do that I need to take out a loan. I went to FNB today to find out about a personal loan of around R15 000. The lady worked out that I would end up paying R920 over 36 months. I worked out that that equals to 61% interest. Can someone please tell me what they are smoking so I can get some too??:wtf:
Is there any other option? I imagine that most other banks would give similar ridiculous rates. She said I can also pay it off over 12 months. Which works out to 40% interest...
Any help would be appreciated.
If it makes any difference I'm 20, been working for a year and I am in a fixed contract.
Click to expand...

Actually its not 61% interest but your age excuses your ignorance. The interest will be 29-32% the rest of the balance is made up with admin fees and insurance (mandatory), you have also most likely had your initiating fee refinanced which has pushed up your payments as it is also attracting interest.
 
creeper said:
The problem with a personal loan is that it is unsecured, therefore the interest rate is about 18% p.a. as the bank is carrying more risk. The best option is to look what type of overdraft you can get or look at a micro-loan like capitec.
Click to expand...

Wish it was 18% thats lower than a credit card, your looking at 25-35% on a > 2yr loan.
 
It is worse than a loan shark. There is a max they can ask you. Do not know what the fig is but I think somewhere around 30%.

I will ask her what it was calculated on.
 
ID_10_T said:
It is worse than a loan shark. There is a max they can ask you. Do not know what the fig is but I think somewhere around 30%.

I will ask her what it was calculated on.
Click to expand...

30% per month but your interest owing may never be more than the outstanding capital amount, ie if you owe R10K capital then accumulated interest may not be more than R10K but its a case of what the law says is not what it does.
 
Wife and I did some major house renovations and overshot the budget by R60 000. Got a personal loan from Nedbank at 12% pa fixed interest rate.
All depends on your personal profile.
 
cbrunsdonza said:
Actually its not 61% interest but your age excuses your ignorance. The interest will be 29-32% the rest of the balance is made up with admin fees and insurance (mandatory), you have also most likely had your initiating fee refinanced which has pushed up your payments as it is also attracting interest.
Click to expand...

On the Capitec site, using their loan calculator:
R15000 over 36 months at R916pm is 61% interest.

http://www.capitecbank.co.za/money-management/online-calculators/credit/
 
The interest rate charged will be as limited by the National Credit act, but the banks add on service fees and and compulsary credit life insurance. (note that capitec do not charge for the life insurance).

With all charges included, it does not suprise me that the "effective" interest rate will be in excess of 60%. If you have no other source of loaning the funds, its best you shop around. Rates charged will all be dependant on your credit profile and the banks view on risk associated with you. Personally however, i would do my best not to obtain a personal loan.
 
AniV said:
On the Capitec site, using their loan calculator:
R15000 over 36 months at R916pm is 61% interest.

http://www.capitecbank.co.za/money-management/online-calculators/credit/
Click to expand...

Its not 61% interest on the loan amount, please read my post. The R916pm will cover mandatory fees and not just interest and repayment. Also the OP was not able to provide information if he is refinancing his initiation fee, what his monthly admin fee is and what is insurance component is. At an interest rate of 32% the he would be paying R700 pm for the loan and R216 for admin & insurance and this sounds right.

I taken a R1000 initiation fee as refinanced in this deal.

(I took out a personal last year so I pretty much found out all the fine print and conditions. The insurance is heavily dependent on your age and risk factor)
 
Thanks for the replies guys. I understand that the 61% isn't the actual interest rate, but it's still ridiculous.
I've decided to rather just get another car (that just opens up a whole new can of worms...). If this sounds strange it's only because the car I'm talking about is a classic Mini, and I've already spent too much money on it.

But it's still good to know if I ever do take out a personal loan, which is unlikely now that I know how much it costs...
 
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