Getting a secured loan might seem overwhelming, and you might be wondering where to begin. In this blog, we'll walk you through the process and what documents you may need.
Secured loan process and timeline
The first step is deciding if it is the right option for your situation. There are many types of loans to choose from, so it's important to carefully weigh up the advantages and disadvantages of secured loans before deciding if this solution is suitable.
Next, check if you're eligible. Do some research on different lenders, find a few you’re interested in, and talk to them to see if you qualify. You’ll also need to decide if you want to apply directly with a lender or use a broker. Learn more about the differences between brokers and lenders here.
If you're eligible and decide to move forward, you’ll need to provide documents to verify your financial details. The lender will then review your application, run credit checks, and assess any potential issues in your credit history.
If your application is approved, the lender will send you a formal loan offer. Be sure to carefully review all aspects, including any early repayment charges and the APRC, to ensure you're happy with the terms. You’ll have 7 days to decide if the offer is right for you, this is known as the reflection period. You can accept the offer sooner, but the extra time is there if you need it.
The timeline this can take really varies on a case by case basis. If you’re motivated and work closely with the lender to get everything organised and sorted quickly, the process will run much more quickly. However, if you don’t respond to any requests quickly, it can take longer to complete.
What documents do I need for a secured loan?
Each lender has different requirements, so the documents you need may vary based on your situation. However, some of the common documents lenders may need include:
- Bank statements: Typically, at least three months' worth of statements to review your income and expenses, verifying all the financial information you've provided.
- Photo ID: To confirm your identity, such as a driver’s licence.
- Proof of address: This could be a mortgage statement or another document showing your current address. Some lenders may verify this online, while others might ask you to provide it.
- Proof of employment: You may need to show a payslip or work contract to prove your employment. If you're self-employed, a tax calculation (SA302) might be needed.
The lender will let you know what documents they need, and if they need more after you’ve sent the first ones, they’ll clearly tell you.
Summary
In summary, a variety of documents may be needed when applying for a secured loan. The timeline for the process can differ based on your specific case and circumstances, and it also depends on how quickly you can provide the necessary documents.
Loans are secured against property. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
