As a student, you may not have a lot of money to your name to for items that you need to improve your life, such as buying a car or paying off tuition debt. It can feel overwhelming to have to deal with scrimping and saving to pay for these but with a personal loan, you will be able to afford whatever you need to make life a little easier.

Know your credit rating

Before you gather your information and documents, you will need to find out your credit rating. This can be done by contacting the credit bureau or for free online. You will receive a credit report with your history and rating, which will detail all your credit debt if you have any.

If you see any discrepancies in this report, you will need to phone the correct bureau and provide them with the correct information in order to rectify mistakes. You will be able to explain any debts you have to your bank by being prepared ahead of time or explain why up until now you have not had any credit behind your name.

Get your important documents in order

When applying for a personal loan, there are certain documents that you will need to provide the bank with, as outlined below.

• A valid South African identity document or card
• Proof of residential address
• The last three payslips or three month’s bank statements

If you are unemployed but living with your parents or guardians, you can provide their payslips or banks statements to the bank, as they will most likely have to stand surety for your loan in case you are unable to pay.

Calculate affordability

If you are going to be using the personal loan for a car, it would be wise to use a car retail value calculator in order to see how much of a loan you can afford. By doing this, you will be able to ask the bank for an exact amount and which  model of car you are interested in. Preparation such as this reflects positively on you in the eyes of any bank.

A personal loan for a student can also be used to buy stationery and pay for daily living expenses, especially if you have already taken out a student loan. Student loans will pay for tuition but sometimes not much else. You will need to calculate your monthly expenses and any stationery needs you have in order to reach an amount that will help you cover these.

Find the right loan for your needs

Don’t hesitate to shop around and look for lenders that will best suit your needs. It is important to find a loan that has interest rates that you can afford to repay. Check interest rates, fees, loan terms and payment options before signing any documents.

You could go to each prospective bank or financial institution with your documents and ask them to give you a quote on a personal loan. This will allow you to find out whether or not it is possible for you to even apply for a loan once you have explained your circumstances. If you do not have an income of some form then you may not be eligible at some banks, so finding this information out before applying is vital.

Find a co-signer

For anyone who may have a bad credit history or none at all, finding a co-signer for a loan is a viable option for loan approval. A co-signer is someone who takes on the responsibility of making the repayments should you fail to do so, so be sure to find someone who you trust.

The co-signer takes on your loan responsibility too, making this a serious decision. It should only be looked at if all other possibilities have been exhausted. It will make your loan approval more likely as your risk profile will decrease. You could ask a family member to be your co-signer but remember that they will also be taking on the repayments of your loan if you are unable to.

Be realistic

Applying for a personal loan is a serious undertaking and you will need to be realistic about your situation. If your credit score is low and if you have little to no employment history, you may be denied a loan outright. You could look into a secured loan if this is the case, or open a savings account instead and contribute to it monthly from your salary or pocket money. Being well-prepared before applying for any sort of finance will help immensely in the long run, so be sure to follow these top tips.