Caution Exercised Whilst Applying for Loans

September 26, 2022

Consumers obtain loans for a multitude of reasons. Whilst loans can be beneficial, it must be perceived as a debt that has to be ultimately paid off. Reliance on loans becomes problematic when consumers are unable to repay their loans; creating financial, emotional and mental pressures on the consumer and their families. Recent complaints lodged at the Council has prompted the team to endow pertinent information in relation to loans.

One of the decisive factors to consider before applying for a loan is the ‘individual’s financial capability’. Consumers must note that should you opt for a loan, you must assess the ability to repay the loan without straining your existing finances or your wallet. Ensure to be in a position to comfortably pay off your loan. Ensure to set realistic budget; ascertain whether there are financial resources available to cater for loan repayment as stipulated, while allowing one to maintain their current standard of living.

Different financial institutions endow dissimilar interest rate, fees and charges, loan repayment terms. Consumers must exercise their due diligence and engage in comparative shopping. Some financial institutions charge a relatively higher rate of interest when compared to others; this will directly impact the manner in which your repayment amounts are articulated. For instance, consumers would end up paying more in interest charges per the duration of the loan which may disadvantage them as they could have either saved or utilized these funds for other purposes.

In circumstances, where there are consistent defaults and follow up for payments are made by the lender or financial institution, through calls and engagement of bailiffs, these telephone charges, as well as the bailiff costs are added onto the loan account. Subsequently, this would result in an augmentation of the loan balance. It is crucial to note that when the lender or financial institution cannot recover the loan repayments, they may pursue to take alternative actions such as repossession of items, small claims proceedings and mortgagee sales to recover their money.