Basics of smart borrowing explained in 5 tips
How to make responsible personal loan use part of your financial planning.
Unexpected expenses creep up when you least expect them. If your finances are stretched, you’re not alone. A personal loan could help you bridge the gap, but smart borrowing is key.
We’ve identified 5 tips to help you decide when a loan would be a good money choice and explain how to include manageable debt in sound financial planning. Here’s what you need to know about responsible loan use:
1. Borrow only for what truly matters
Taking out a personal loan isn’t a decision to make lightly. It comes at a cost, so you should consider a loan only for something important. You may need a loan to renovate your home to suit your family’s needs, pay school fees, or buy items that will make home life more comfortable. You might also consider a loan for an urgent unplanned expense like medical emergencies or fixing a leaking roof before it gets worse and causes more damage.
Avoid taking out a loan for tempting luxuries like the latest gadget upgrades or heavily hyped products on social media. Ask yourself: 'Will I still be paying for this when the thrill and novelty have worn off?' Borrow for needs, not wants, and you’ll thank yourself later.
2. Understand the cost of credit
Before you sign up for a loan, make sure you understand all the costs involved. Take a close look at the interest rate, monthly instalments, and repayment term, as well as any once-off administration or initiation fees. Can you manage the monthly payments alongside rent, groceries, and other bills?
To help give you a clearer picture of what you’re committing to, you can use our loan calculator to work out an estimate of the costs of a specific loan.
You could consolidate all your debt into a single personal loan to make repayments simpler
3. Pay on time and earn rewards
Who doesn’t love getting something extra for doing the smart thing? With a Nedbank Personal Loan, if you make all your payments on time, you’ll qualify for the Responsible Borrower tier on your accounts linked to Greenbacks, which will enable you to earn Greenbacks on qualifying transactions at a higher rate.
You can redeem your Greenbacks for travel and shopping, withdraw them as cash, add them to your savings and investments, or donate them to a cause close to your heart through a Nedbank affinity – the choice is yours.
4. Borrow only what you need
When you qualify for a loan amount that’s higher than you expected, it’s easy to see it as 'free money'. But a bigger loan will also mean higher repayments and more interest.
Before you accept a loan offer, calculate exactly how much you need and request a loan for that amount – for example, just enough to cover school uniforms or a broken water pipe. Borrowing only what you need keeps your finances manageable and reduces stress.
5. Consolidate to simplify your debt
If you have several loans that are putting you under financial stress, you could consolidate all your debt into a single personal loan to make repayments simpler. You’ll have 1 repayment to manage, and you might even pay less in interest. It’s a win-win situation.
Why choose Nedbank for your personal loan?
Our personal loans are designed to give you peace of mind, knowing that you’re getting affordable interest rates, a repayment term of between 6 and 72 months that suits your personal circumstances, and rewards to sweeten the deal.
These include extra perks like R200 cashback every month for the duration of your loan term if you open a MiGoals Plus or MiGoals Premium account and have your salary paid into it. Further terms and conditions apply.
You can apply for a Nedbank Personal Loan in minutes with the Money app or Online Banking. Used responsibly, it could help you build a healthier financial future.
