Getting Loans

We’re not talking mortgage size loans here – loans don’t have to be for large amounts and they don’t have to be for tuition payments. Read on to learn how and when to use loans, and what may be the best options for you!

What is a loan, and why get one?

A loan is a way to get a sum of money, which you will be required to pay back later. Loans have interest rates and terms, meaning that you will eventually pay back in a certain timeframe (called amortization period) more than you originally borrowed. Different types of loans have different interest rates and different timelines for repayment.

Often, we consider loans solely in the context of paying tuition. And while loans can be helpful for that, small loans can also be helpful for other things. Say you need to spend a lot of money all at once — perhaps you are moving, or need to fix a vehicle — but because you get paid monthly, you do not have that much cash on hand. A loan might then be a good way to get that money together, knowing that as you get paid over the next few months, you will have the funds to pay back the loan. 

What type of loan should I get?

At PlusSave Financial Solutions, we offer fast, flexible, and short-term loan services designed to support small businesses, traders and individuals with daily repayment options, minimal paperwork, and personalized support because we believe access to finance should be simple, transparent and empowering.

1. Microloans

2. Personal loans

3. SME Business loans

4. Group lending

5. Mobile & Digital loans

6. Fixed deposits

Key aspects of financial literacy directly related to taking on a loan include:

Budgeting: Before borrowing, a financially literate person creates a detailed budget to understand their monthly cash flow. This plan helps determine if they can comfortably afford the loan's monthly payments without overstretching their finances.

1. Understanding loan terms: A critical step is reading and understanding the fine print of a loan agreement, including all terms and conditions. This includes:

   Interest rates: Understanding the difference between fixed-rate loans (stable interest) and variable-rate loans (fluctuating interest) is crucial for managing repayment costs.

   Hidden fees and charges: Financially literate borrowers can identify and avoid unexpected costs, such as prepayment penalties for paying off the loan early.

2. Creditworthiness: Your credit score and history are key factors in a lender's decision to approve a loan and determine your interest rate. A good credit score indicates lower risk to lenders, which can result in better interest rates and terms.

   Understanding the factors that influence your score—like payment history and debt-to-income ratio—is essential for improving your credit profile.

3. Secured vs. unsecured loans: Knowing the difference helps you weigh the risks involved.

   Secured loans are backed by collateral (e.g., a car or house). This often means lower interest rates, but you risk losing the asset if you default.

   Unsecured loans (like credit cards) are not backed by collateral and rely solely on your creditworthiness. They may carry higher interest rates as a result

The importance of financial literacy for borrowers

A solid understanding of financial principles helps individuals navigate the borrowing process and avoid common pitfalls.

• Prevents over-indebtedness: Without financial literacy, people may take on too many loans without a clear repayment plan, leading to overwhelming debt.

• Smarter borrowing decisions: Literacy empowers you to compare different loan products, interest rates, and lender offers to find the best option for your financial situation.

• Effective debt management: Beyond just avoiding debt, financial literacy provides the skills for managing it efficiently. This includes prioritizing high-interest loans for faster repayment and using techniques like refinancing or consolidation when appropriate.

• Avoids predatory lending: By understanding loan products and terms, a borrower is less likely to fall victim to predatory lenders who offer high-interest, unfair loans.

• Builds long-term financial health: Responsible borrowing practices, guided by financial literacy, improve your credit history and set the foundation for long-term financial security.