The lowdown on loans

by | Sep 14, 2020 | Personal Finance

As we continue to reel from the effects of Covid-19 and the subsequent lockdown, we may be forced to borrow money – and it’s a good idea to know what your options are with regard to loans.
South Africa has incredibly strict and stringent lending policies. We also have the National Credit Act in place since 2007. One of the main functions of the NCA is to protect consumers against lenders and credit agreements.

There are 2 main types of loans: Secured and unsecured


Secured loans

Secured loans are loans that have security which can be resold should you not be able to repay your credit agreement.

Types of secured loans

Home loan – a loan granted by a bank, mortgage company or other financial institution in order for you to purchase a house.
Vehicle finance loan – A loan given by a financial institution to finance the purchasing of a car.

Unsecured loans

This is a loan that offers no security if you don’t meet the obligations of your credit agreement and you’re therefore the interest rate on unsecured loans are very high. Your credit history, our credit score and your affordability plays a huge role in the granting of these loans.

Types of unsecured loans:

  • Student loans – a loan from a bank or financial institution used to fund the studies at an educational institution.
  • Personal loans – granted to consumers for personal use (eg. Emergency medical expenses, household maintenance and repairs, to pay off another loan etc)
  • Credit card – a card issued by a bank/ financial institution that allows the consumer to but on credit
  • Pay day loans – normally small amounts of money loan to consumers at very high interest rates that is paid back to the lender on the debtors next salary date.


Before you get yourself further into debt – please consider the option of debt review. NDA has expert debt advisors on hand to explain the process to you.

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