What is Debt Consolidation?

Debt consolidation is an unsecured loan that enables customers to take out one loan to pay off many others like other personal loans, retail store balances, tertiary fees or other types of debt they may have.

Debt consolidation allows for internal and external exposures to be moved into a single exposure in order to improve customers monthly cash-flows.

Product Features and Qualifying Criteria

  • Applicants must be permanently employed and earning a minimum of R3000 per month.
  • Applicants must be between the ages of 18 and 65 years’ old.
  • Applicants can apply for loan between R10 000 and up to R180 000 which is affordability dependent.
  • Structured repayment period between 12 and 72 months.
  • A Debt Consolidation loan can be paid off at any time with no penalties charged.
  • Outstanding loan balances are paid out immediately into the credit provider’s bank account upon approval.
  • No deposit is required from applicants.
  • No penalty interest will be charged if debt consolidation loan is paid off early.
  • The initiation fee can be paid up-front to lessen the administration fees.

What are the Benefits of Debt Consolidation?

  • Multiple monthly payments are limited to a single combined payment; this simplifies the management of monthly repayments.
  • A single loan instalment is often lower than those paid for previously, making budgeting on a monthly basis a lot easier.
  • Monthly debts instalments are reduced by spreading the repayments over a longer term, helping the customer with cash flow in the short term.
  • A customer can qualify for a top-up to their Debt Consolidation loan. For example, if a customer has 3 exposures (debts) that they want to consolidate amounting to R50 000, they can qualify to top up their loan by R25 000 to R75 000. The R50 000 will be used to settle the credit providers and the R25 000 will be disbursed to the customer’s account for their personal use. Customer repayment will be calculated on the total loan amount of R75 000.

Extra money paid into the loan reduces the interest charged on the account and reduces the remaining term. If the customer is in need of extra funds, a new application must be submitted. Additional payments made to the loan are not refunded since these amounts automatically reduce the outstanding balance on of the loan

To Apply for the Debt Consolidation Loan, Please Bring the Following:

  • A valid loan settlement quotation letter/s not older than 7 days from the OFI (Other Financial Institution) or any other credit provider must be provided for each loan to be settled.
  • Green barcoded South African Identity Book or ID Smart Card
  • Valid passport with a valid work permit for non-South African citizens
  • Latest original payslip
  • Proof of physical address (not older than 3 months), e.g. Electricity or cell-phone statement
  • Bank statements for the last 3 months (If not a ubank customer) and
  • Applicant must have an income of at least R3 000 a month and a bank account into which their salary is paid.

What to Expect During the Application Process?

  • When the customer applies for the loan, they will be requested to submit the necessary documents to the sales consultant.
  • The sales consultant will assess whether the applicant can afford the amount of the Debt Consolidation loan.
  • Once assessment is completed and satisfactory, then, the customer will be given a quote which will be valid for 5 (five) days.
  • When the customer accepts the quote and signs it, it will be binding, and the bank will settle the customer’s other within 24 hours

Does Debt Consolidation Require a Credit Life Assurance?

  • Like all loans, Debt Consolidation loan does require customers to have a valid credit life cover (CLA). An affordable credit life assurance policy is available to our customers if they do not have an existing one.
  • Credit life insurance provides peace of mind in the case of a permanent disability, involuntary retrenchment or natural and accidental death of the main policy holder.
  • Credit life insurance will cover the total outstanding balance on your loan account, ensuring that the financial burden doesn’t fall on your family in case of an eventuality.

Pricing Structure on Debt Consolidation

Interest rates

  • Interest calculation is based on a fluctuating variable interest rate that is linked to Prime rate.
  • Interest is calculated upfront (on the forecasted daily balance) and is charged monthly as part of the instalment.