A loan is a sum of money borrowed from the bank to assist for certain planned or unplanned events. The borrower is required to pay back the loan, including the interest charged over a stipulated period. There are several types of loans for various financial requirements. A bank can grant a loan in the form of a secured or unsecured loan. A secure loan is usually a large sum of money that is needed to purchase a house or car and is the ideal choice for a home loan or car loan. An unsecured loan is preferential for student loans, or personal loans which usually consist of smaller amounts of money.

TYPES OF LOANS
Banks provide various types of loans to ensure that they meet all your needs.

• Home Loan – The bank borrows you money, and the house remains the property of the bank until the final instalment is made. Consumers are required to pay back the loan on a monthly basis, at the given interest rate and over a stipulated period, normally 20yrs.
• Student Loan – Students that want to further their studies at any higher education institution that require financial assistance apply for student loans. The bank provides the money for the duration of their studies and after the completion of their studies; the student needs to pay back the money. The interest rates are usually low and there are flexible repayment options.
• Car Loan – Most banks provide car loans for both used and new cars. Consumers pay back the instalments on a monthly basis, and the vehicle belongs to the bank until the final payment is made.
• Personal Loan – Banks provide different options when it comes to a personal loan. This is a financial solution ideal to suit all your needs. The amount of money that you can borrow depends on the chosen bank, your financial eligibility and affordability to repay the loan.
• Business Loan – A business loan provides you with the capital to start your business venture. The bank provides you with the money and you are required to make the repayments after an agreed period of time. The requirements vary according to each bank and whether you are a new business or have been in operation plays a major part in your loan application.

SECURED LOAN VS UNSECURED LOAN
A Secured Loan is a long-term loan, which has a guarantee attached to it. It’s the best way to obtain large amounts of money and purchase property. Assets are used as security in case of a default. Large amounts of money will not be borrowed to you without assurance, which is why you place your home or assets as leverage to guarantee that you will repay your loan on time. Secured loans consist of low interest rates and longer repayment options.

An Unsecured Loan is a short-term loan and it has no guarantee attached to it. It is usually given on the basis of your credit record and financial position. Unsecured loans include credit cards, personal loans and student loans. Owing to the high risk of this type of loan the, the interest rate is also higher. It is imperative to consult with your chosen financial institution on the various options regarding both their secured and unsecured loans.

CRITERIA FOR APPLYING FOR A LOAN
Every financial institution has different criteria for their loan applications dependent on the type of loan. There are, however, common elements. Generally, when you apply for a loan you must:

• Be 18 years or older
• Have a valid South African ID
• Hold a bank account
• Provide proof of residence
• Present 3 – 6 months recent salary slips or bank statements
• Provide proof of income

It is your responsibility to find out each financial institutions features and benefits and to compare them respectively. Numerous options are available, so choose the option that best suits you and your needs. 

FACTORS TO CONSIDER
Taking a loan is a big responsibility and you are required to pay back all the money plus interest. There are numerous factors that will affect the cost of your loan, namely:

1. Credit Record – Your credit record will determine your loan rates. If your credit record is good and shows reliability, you will incur lower interest rates. Similarly, if your credit record is in a bad state, it will be more difficult for you to obtain a loan, and your interest rates will be higher.
2. Loan Duration – The loan duration is another factor when deciding on the cost of your loan. The longer you choose to pay off your loan, the higher the interest rates.
3. Type of Loan – The type of loan you decide on will also impact your interest rates, a secured loan, usually contains lower rates, compared to an unsecured loan.
4. Inflation Rate – The inflation rate is the rate at which prices increase in the economy. This has a major impact on your interest rates.

When you take out a loan, it is imperative to know your repayment date. If you have not signed a stop order it is your responsibility to ensure that the monthly payments are made on the due date for the duration of the loan period. If you fail to repay the correct amount, there are numerous penalties you may face, including:

• A bad credit record
• A higher interest rate
• Reduced chances of applying for another loan
• An additional late payment fee

PAYMENT PROTECTION INSURANCE
To avoid the above-mentioned penalties, it is advisable to take out Payment Protection Insurance. It ensures the repayment of your loan if you die, lose your job or become disabled or ill. You can obtain Payment Protection Insurance on your home loan as well as for your credit card and personal loans. To prevent any claiming issues, ensure that you read all the terms and conditions, completely understand your policy, and are aware of all the details.

ANNUAL PERCENTAGE RATE
The representative Annual Percentage Rate (APR) is the charged interest rate for the whole year. The APR measures your cost of borrowing money from a specific institution, as well as any other associated costs. Institutions vary in terms of their transaction fees, interest-rate structures and late penalties, so it is useful when you need to compare different loans. Each institution includes its own APR, therefore you need to meticulously evaluate each one and choose the best option.

Saving involves saving money for a specific period, with a goal in mind. We all understand that sacrifices need to be made, and that you need to start saving from an early age. But what exactly does it entail? It is imperative to realise that saving does not just involve getting discounts, but it also means saving your money on a regular basis. Here are a few tips on how to save:

BUDGET
As overwhelming as the concept may seem, budgeting your monthly expenses is the first and foremost step towards saving. By creating a budget you ensure that your money is being used the way you want it too. You can also plan better and save up for your bigger purchases. And creating a budget is easy:

• Collect all your financial statements, which include bills
• Record all your sources of income
• Make a list of all your expenses
• Total the monthly income and the total expenses
• Review your budget – if your expenses are higher than your income, you need to evaluate your budget and decide the area in which you will reduce your expenses
• Incorporate a saving section into your budget

A budget allows you to keep track of all your expenses, but it is also essential to stick to it, to make progress and reach your saving goals.

EXAMINE YOUR SPENDING HABITS
Saving is not easy, and a great way to start is to track your spending habits.

• Never purchase any items on impulse, think carefully about each purchase
• Keep track of what you spend and keep all receipts
• Take advantage of discounts, specials and sales. But only purchase what you need

HAVE A SAVINGS GOAL
Setting up a savings goal is important as it helps you monitor your expenses and avoid any unexpected expenses. It also helps you reach a specific financial target. Here is a simple way to set up a savings goal:

• Determine you goal, what you are saving for, and have a clear understanding of your goal
• Decide on the amount and the time frame
• Review your budget and make the necessary provisions
• Choose the correct savings account according to your goal and the time frame

Banks offer various savings accounts therefore it is imperative to decide on the correct account according to your savings goal. There are accounts for short, medium and long term savings, so you need to decide on the one that best suits your needs. You also need to be disciplined.

TIPS ON HOW TO SAVE QUICKLY AND ON A MONTHLY BASIS
It’s never too late to start saving, all you have to do is make a few small change

1. Pay your bills on time to avoid penalty charges
2. Be frugal with your appliances; turn off all unnecessary appliances and lights
3. Plan your meals ahead of time as well as your grocery shopping
4. Cancel any subscriptions you don’t need
5. Price check all your purchased items
6. Save on petrol costs and car pool where possible
7. Cut back on social and entertainment costs

Implement the above mentioned tips and stay on track and keep your goal in mind all the time. You can also visit your financial institution for more advice and tips on how to save.

A bank account is a safe and useful place to keep all your money. You enter into an agreement with the bank, and they provide you with a service. They provide you with peace of mind; you know that your money is safely and securely deposited into a bank account of your choice. A bank account is also convenient, as you can access your money from any ATM.  It is also makes it easier to save and invest your money for your future.

TYPE OF BANK ACCOUNTS
Opening your own bank account is the beginning of effective financial freedom and management. However, it is imperative to select the correct account that suits your financial needs. Banks offer different accounts, so it is advisable to speak to one of the consultants for assistance. The different types of accounts offer unique services, charges and benefits; therefore it is important to select the account tailor made for you.

1. Cheque or Current Account – A cheque or current account usually requires a minimum qualifying salary. Deposits, withdrawals, debits and transfers are permitted, and there are numerous benefits available for this account. The interest rates are usually low and there is a nominal monthly fee, and you can use your debit or cheque card to make payments and purchases.
2. CreditCard – A credit account helps you expand your financial resources. The interest rates are relatively higher and you can also use this card to make payments and purchases. There is also a qualifying minimum salary and you usually don’t pay any transactional fees.
3. Savings Account – Is a deposit account that helps you save and provides you with security at an affordable interest rate. Some banks allow saving accounts to be used as transactional accounts. The banks need to be given notice when a large withdrawal needs to be made.
4. Mzansi Account – This type of account has been created for customers who deposit or withdraw money on an irregular basis and don’t have a regular income. The bank fees, interest rates and qualifying criteria are usually low. Withdrawals and deposits can be made with your debit card and your funds can be easily accessed.

MONEY MARKET ACCOUNT
This investment account offers you competitively high market-related interest rates. It is similar to a savings account, but you need to maintain a higher balance and a minimum deposit is usually required. This flexible, short-term investment accounts benefits vary according to each bank, so speak to a consultant.

A bank account is a safe and useful place to keep all your money. You enter into an agreement with the bank, and they provide you with a service. They provide you with peace of mind; you know that your money is safely and securely deposited into a bank account. A bank account is also convenient, as you can access your money from any ATM.  It is also easier to save and invest your money for your future.
HOW TO OPEN A BANK ACCOUNT
Opening a bank account is simple, but it is essential to know what type of account you would like to open. Banks offer numerous types of accounts, with their own benefits, so you need to decide on a bank and the type of account that best suits you and your needs. Simply walk into the bank, speak to one of the consultants and present the following:

• A valid South African ID
• Proof of residence
• At least 3 months’ payslips
• A minimum deposit of R50

Minors or people younger than 18 can open their own bank accounts, with the consent of a parent or legal guardian. They require the following to open their own bank accounts:

• A valid ID or birth certificate. Proof of residence. Completed application form signed by the parent or legal guardian. A valid ID of the parent or legal guardian.   A minimum deposit of R50

If you would like to open a bank account and are older than 18 years old and cannot produce at least 3 month’s payslips or you are not employed, there are bank accounts to meet your needs as well. Numerous banks offer an account where only the following is required to open an account:

• A valid South African ID.Proof of residence. A minimum deposit of R50.

ACCOUNTS FOR NON-RESIDENT CITIZENS
A non-resident is anyone whose place of residence or registration is outside of the common area, in our case South Africa. There are numerous benefits for non-residents as well but it varies according to each financial institution. If you are not a South African resident, and would like to open a bank account, you need to present the following information:

• A valid passport. A valid visa. Proof of residence. A letter of introduction from your country of origination banker, stating your name, address and the period and conduct of your bank account.

It is essential to choose a bank account that suits all your financial needs. Banks have different accounts with their own benefits and features. The purpose of the account also plays a vital role. Whether you are making transactions on a daily basis or are saving for a holiday, you need to choose an account that will meet all your needs. Here are a few guidelines on how to choose an account that works for you:

• Features – You need to consider the features of the account. The monthly fees, the interest rates and the withdrawal and transaction fees. You also need to consider the minimum opening balance and the minimum account balance.
• Services – The services the account provides you with is also essential. Is there internet banking available and mobile access? Can I make direct debits, overseas transactions and is a cheque and overdraft facility available?
• Benefits – The benefits available to each account needs to also be taken into consideration. Will they truly benefit you?

The type of account depends on your needs and how often you make transactions. It is essential to speak to a consultant for further assistance.
TYPE OF BANK ACCOUNT
Opening your own bank account is the beginning of effective financial freedom and management. However, it is imperative to select the correct account that suits your financial needs. Banks offer different accounts, so it is advisable to speak to one of the consultants for assistance. The different types of accounts offer unique services, charges and benefits; therefore it is important to select the account tailor made for you.

1. Cheque or Current Account – A cheque or current account usually requires a minimum qualifying salary. Deposits, withdrawals, debits and transfers are permitted, and there are numerous benefits available for this daily, cost-effective account. The interest rates are usually low and there is a nominal monthly fee, and you can use your debit or cheque card to make payments and purchases.
2. Credit Card – A credit account helps you expand your financial resources. The interest rates are relatively higher and you can also use this card to make payments and purchases. There is also a qualifying minimum salary and you usually don’t pay any transactional fees.
3. Savings Account – Is a deposit account that helps you save and provides you with security at an affordable interest rate. Some banks allow saving accounts to be used as transactional accounts. The banks need to be given notice when a large withdrawal needs to be made.
4. Mzansi Account – This type of account has been created for those who deposit or withdraw money on an irregular basis and don’t have a regular income. The bank fees, interest rates and qualifying criteria are usually low. Withdrawals and deposits can be made with your debit card and your funds can be easily accessed and moved.
5. Money Market Account – This investment account offers you competitively high market-related interest rates. It is similar to a savings account, but you need to maintain a higher balance and a minimum deposit is usually required. This flexible, short-term investment accounts benefits vary according to each bank, so speak to a consultant.

As with everything in economics, there are several competing definitions for the term interest rates. Interest rates can be explained as:

• The amount charged, expressed as a percentage of the total or outstanding loan amount (principal), by the lender to the borrower for the use of assets. Assets borrowed can include cash, consumer goods or large assets such as vehicles or property.

• The interest rate is calculated by dividing the amount of interest by the principal. The interest rate charged on the principal is dependent on the individuals risk profile, lower interest is charged on lower risk and higher interest is charged on higher risk. Interest rates often change as a result of inflation, Reserve Bank policies, and supply of or demand for credit.

Generally, interest rates for access to credit cards, mortgage or loans are charged on an annual basis, known as the Annual Percentage Rate (APR). Conversely, when consumers earn interest for savings or investments the interest rate is expressed as an Annual Percentage Yield (APY).

The South African Reserve Bank defines interest rates, in simple terms, as the “prices for loanable/funds – prices of funds invested, lent out or borrowed for various periods of time”. The supplier or lender of funds normally wants to earn an income and the user or borrower will generally be prepared to pay for the right to use the accumulated funds.

If you want to switch your transaction account to a different bank, make sure that you are moving for the right reasons. You should take the following into consideration before you start the process:

Rates and fees of the new bank versus your old bank – being savvy can help prevent excessive fees and charges.

Location of bank branches/ATMs to meet your needs – having conveniently located ATMs and local branches that are easily accessible are an important aspect of customer service.

Additional benefits on offer from both banks – each bank and account type has different benefits and you should evaluate your needs and choose a bank with features to suit your requirements.

You should always remember the following when switching your transaction bank account:

• Provide your Employer with your new bank details so your salary can be paid into the correct account.
• Ensure that all the transaction originators have updated banking details for your debit orders and other transactions to prevent unpaid debit orders on your old bank account.
• Ensure your new bank includes those once-a-year debit or stop orders by providing complete switching instructions.

Switching your transaction bank account from your old bank to the new bank is easy if you follow these three steps:

Step 1 – Open a New Account

Before you are able to transfer your transactions to your new bank you need to open a new account.

When you open your new account, your bank will provide you with the following information and assistance:

• The terms and conditions applicable to your new account.
• Standard fees, charges and interest rates that apply to your new account.
• Contact information for further assistance in switching your account.

Once you have opened a new account, give your new bank the relevant information so that they can transfer debit orders, arrange new stop orders and if necessary, load your payment beneficiaries. After you give your new bank a signed debit order or salary redirect form, your new bank may inform existing debit order originators of your new account details. However, You may still have to confirm this with the originators.

Step 2 – Switch Transactions

Request the following information from your old bank, which they are required to provide within 10 business days:

• Your last 3 months’ bank statements.
• A list of all current stop orders loaded on your account.
• A list of all current beneficiaries loaded on your account.
• Details of any supplementary or linked cards or accounts which may be affected by closing your account and switching banks.

After you have supplied bank statements, stop orders, beneficiaries and supplementary details to your new bank and your new bank has loaded the relevant details you can close your old account.

Step 3 – Close Your Old Account

Once you have opened your new account and switched transactions, ask your old bank to close your transaction account. Switching banks can take time and it is recommended that you keep the old account open for at least 6 weeks to identify and switch all transactions before closing your old account. It is a good idea to keep funds in the old account to cover any transactions which may be delayed when switching. When you close your account ask your old bank to transfer any remaining funds to your new account.