26 Feb How Interest is Worked Out on a Personal Loan
If you are thinking about applying for a personal loan, you might be wondering how the interest is calculated. At Loan Wave, we are all about transparency, and our lenders take the time to ensure clients understand their loan agreement before committing to it. When it comes to how interest is worked out on a personal loan, there are various factors that are first considered.
How your Monthly Interest Is Calculated
The National Credit Act (NCA) regulates fair lending processes throughout South Africa, including the interest rates associated with loans. At Loan Wave, you pay back what is referred to as “simple interest,” which is calculated on what you still owe and not the original, full-term amount. Over time, your balance decreases and so does your interest.
Before we approve any loan applications, from medical loans to payday loans, we first do a credit check and an affordability assessment. This helps us to determine what you can afford to borrow, and indicates your risk profile as a credit-active consumer. When taking out a loan, always make sure you read and understand your pre-agreement quote before signing. Our Loan Wave team will gladly and honestly address any questions you have, while also guiding you during the lending process.
Interest Rates Differ
Not everyone gets the same interest rate. As National Credit Regulator (NCR) approved lenders, we consider a few key factors before deciding on your interest rate. One of the most important factors is your credit score, which ultimately shows us your creditworthiness. A good credit score typically results in a lower interest rate. In some cases, it is worth improving your credit score before even applying for a loan.
We also factor in the loan terms, and in many cases, larger loans over longer repayment periods lead to a higher interest rate. Remember, we will always first ensure you are not overextending yourself, based on your income and your financial circumstances. Also, keep in mind that the current prime lending rate directly impacts the interest you repay on your loan. You can avoid loan regret with key considerations and proper planning.
Borrowing Money Safely
Do your homework before taking out a loan with the first lender you come across. Safe loans should always align with your budget and be manageable. If you’re ready to apply, here is some expert advice for the best ways to improve your loan application success. There is no need to visit a bank or stand in a long line to access a loan – APPLY NOW for a trusted loan service through Loan Wave.