Find the best fixed-rate personal loans in South Africa
If you want to borrow money from a South African lender, they will charge you for this service, which explains why loans have interest rates. An interesting feature of interest rates is that they can be fixed or variable. Fixed rates are very common and popular but will this option help you save money?
Learn more about how this loan type works and how you can get the cheapest fixed-rate personal loan in South Africa.
What is a fixed rate personal loan, and how does it work?
With fixed-rate personal loans, the interest rate you get from the start is the same rate you deal with until you finish paying off the loan. Since the same interest rate is applied every month, your payments are always the same. For most personal loans, you can borrow any amount between R2000 and R300 000 and pay it over a loan term of 12 months up to 84 months.
When should you choose a fixed rate personal loan?
Based on how this loan type works, a fixed rate is best for when:
- The current rate is very low. If the rate is at an all-time low, you can lock in this favourable arrangement to guarantee low monthly payments over the life of your loan.
- The loan has a longer term. If your repayment period is long, it can be difficult to tell the future behaviour of interest rates in South Africa. A fixed-rate is a safer bet than a variable rate that might potentially go up and up, increasing the cost of the loan.
- You prefer monthly payments that are easy to budget for. If you prefer a stable monthly budget, a fixed rate is the way to go.
- You wish to refinance a variable rate loan. If your variable rate loan is getting out of control, you can turn it into a fixed-rate loan to keep total costs down.
Advantages of taking out a personal loan with a fixed interest rate
- A fixed interest rate is not linked to current economic or market conditions. That means if the market rate increases, you’ll be protected from monthly payments that go up when you least expect it.
- It’s easier to budget when you have consistent monthly payments.
- Fixed-rate loans are readily available in South Africa, even if you wish to apply online.
Disadvantages of taking out a personal loan with a fixed interest rate
- If the market rate goes down, you also won’t be able to take advantage of the situation and save money.
- A fixed-rate loan usually has a higher starting interest rate than a variable rate loan.
How do you choose the best fixed-rate loan?
Locking in the lowest interest rate you can get is a good start. However, you can get an even better deal if you consider the following factors when comparing fixed-rate loans:
- Loan fees. Check for all fees, including hidden, upfront, and ongoing fees so you can choose the cheapest fixed-rate loan. Also look at the Annual Percentage Rate (APR) or comparison rate, which includes the interest rate and all fees and charges attached to the loan.
- Repayment terms. Find a lender who offers the loan term and repayment plan that’s most comfortable to you. Avoid lenders that charge penalty fees when you pay the loan early or make extra repayments.
- Secured loan vs. unsecured loan. A secured fixed-rate loan is backed by collateral, but the lender can claim this asset if you default. On the other hand, unsecured personal loans can have higher interest rates and limited borrowing power.
Fixed-rate personal loan calculator – Find affordable monthly payments
A fixed-rate loan offers you monthly repayments that never change, but how much can you afford to pay every month? Use the fixed-rate loan calculator from CompareLoans to figure out an estimated monthly repayment that works for you. Get started by adjusting the sliding tools so you can input your loan amount and term. Click “Calculate Repayment” and check for the results in our comparison tables above.
What are the requirements for a fixed-rate loan?
The interest rate and the loan amount you qualify for depends on the following requirements:
- A good credit score. An excellent credit score helps to guarantee the lowest rates possible, but you might still be able to qualify for a bad credit fixed-rate loan.
- A regular, monthly income. In most cases, you have to provide your bank statements and payslips for the last 3 months as proof of income.
Additionally, you must provide valid copies of your South African ID, and you should be 18 years and older.
How to apply for a fixed rate personal loan in South Africa
After comparing the lenders featured in our tables above the next steps are as follows:
- Click “Go to Site” for the fixed-rate loan of your choice.
- Once you’re on the lender’s website, apply for a personal loan online by filling out the application form provided.
- Upload and submit the required documents. If you get approved, you sign the contract to show you agree with the terms and conditions.
What are the uses of a fixed rate personal loan?
After the funds are transferred to your bank account, a personal loan with a fixed rate can be used to cover many expenses, including:
Fixed-rate loan vs. variable rate loan
A variable rate loan has an interest rate that can fluctuate while the rate for fixed-rate loans stays the same. The biggest advantage of variable rate loans is the ability to save money when the market rates go down. If this sounds interesting, read more about how variable rate loans work.
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