All you need to know about Capitec Loans in South Africa

by De Paul
Everything you need to know about Secured Loans in South Africa

Key takeaways

  • You can get money from Capitec within a few hours and attend to your needs
  • The are many loans you can get without collateral
  • After getting a loan, they can help you to save the money
  • You will deal with professionals throughout the process

What Capitec Loans is all about

Arguably one of the largest lenders in South Africa. Capitec bank has hailed out many financially struggling households and companies through their wide range of loan options. They have been eligible to meet almost every financial demand given to them, and that’s been one of the most significant reliefs to many people in the country.

Capitec has partnered with many other service providers ready to help and work with you to make it easier for you. In short, Capitec is all you have been looking for to solve your financial challenges.

Capitec has been one of the most trusted lenders in the past ten years. They have four vehicles that can help you in any way. Whether you want to Transact, Save, ensure or get money on credit.

They can give you money, help you to buy with and help you to save it as well. On top of that, they can even ensure the assets you purchased with that money. What a friend South Africans have had in Capitec.

All you need to know about Capitec Loans in South Africa
All you need to know about Capitec Loans in South Africa

Why you need Capitec loans

  • It gives out a more significant loan amount.

With most of the loans, Capitec is generous enough to give you a more significant loan that can take you to heights. Home loans give out up to a maximum of R500 000 to cover your home improvements.

This amount does not involve any attachment to collateral and is primarily available to employed people to improve your home.

  • Faster to get the money

Unlike many lenders, Capitec is relatively faster to disburse and send money to your account. This is important to many people as most of the damages to your home might not be budgeted for. Some of the needs are caused by things like heavy rainfall and lightning.

  • Can have an extended loan tenure

Many lenders are strictly in short-term loans with a life span of less than a year. This is different to Capitec as they can offer you an extended loan tenure of up to 18 months.

This gives you extra time to look for more money, and your instalments are spread over an extended period. A larger life span means you will pay smaller monthly instalments, leaving you with more money.

  • Discounted interest rates 

Compared to most lenders, Capitec remains one of the best lenders as far as Interest rates are concerned. They provide lower interest rates that make you enjoy the loan even better.

Types of Personal Capitec loans (Credit)

Capitec boasts of meeting your financial needs no matter how stressful they have been to you. Whether you want to buy a house, a car, a credit card, cash advancement, or you want to pay anything of your need. They have several products that you can choose from below.

  • Capitec Home loans – Personal

This group of loans is available to you if you want to buy a house or make improvements or renovations. With home loans, you can get your house stress free with Capitec.

  • Education loans

It’s no longer that time for you to miss lessons or for your loved one to miss school because you can’t afford school fees. You can get R500 000 for your loan and pay for your education.

  • Medical bills credit

Sickness comes mostly when we are not expecting it to arrive. Even if your medical policy covers you, sometimes bills may be too much for you to cover at once. Most of the time, policies only pay for your strictly medical bills, but they don’t take care of some other needs that need to be attended to.

With that in mind, Capitec provides medical bills loans that can go as high as R500 000 for free during such a difficult time.

  • Vehicle loans

If you have trouble getting a car loan, your hustle is finally over, and you are ready to drive in a few hours. Capitec can give you some money to buy your car within hours.

Unlike other personal loans described above, Vehicle loans attract a relatively lower loan amount of R250 000. It also has a shorter tenure of 72 months compared to the 84 months on other loan options like education, home improvements and medical loans.

Capitec Business loans

Capitec loans do not offer only Personal loans as explained above; they also have financial solutions to your business needs. They provide several business loans that can fit your company to pay for new equipment, salaries and any other requirements you wish.

Capitec offers you options in Overdrafts, Term loans, Business credit cards, Assert Finance – Franchise and Asset finance – property finance.

Overdrafts

With bank overdrafts, Capitec bank allows companies who bank with them to take/withdraw funds above their bank balance. They charge interest, what they call overdraft fees, as a percentage of the amount drafted more than the bank balance. The Bank, however, does not give this option for free.

Advantages of bank overdrafts

  • Provides an excellent cover to funds flow mismatches

More often than, businesses find themselves in situations that they could not imagine during budget planning. More often than, accounts receivables may take longer to be received than expected. This usually;y creates a funds mismatch where outflows get overdue without the corresponding income to pay for them.

This situation may create a bad relationship with the suppliers or creditors. And to cater for this, Capitec can allow you to overdraw funds over your current bank balance, solving this unfortunate situation. It is important to note that you have to be banking with Capitec to qualify for this facility.

  • Helps improve the company’s goodwill

More often than, a company’s goodwill may be affected by failure to pay creditors in time. This may also damage the company’s credit score when you fail to pay loan instalments in time.

It may also be very relationship damaging if you give out cheques and they bounce into the hands of the creditor due to insufficient funds. This cover from Capitec helps you to be a reliable company that many clients will be happy to deal with.

  • Relatively cheaper than most loans

Capitec’s bank overdrafts are cheaper than most business loans across lenders in South Africa. Due to the security and good relationship created between you and Capitec, Overdrafts usually attract a low interest than a standard loan.

  • Reduces penalty of defaulted instalments

Providers usually attach interest or a penalty whenever you miss the due date for a loan instalment of any other outstanding debts. This has been common with many companies that do not have an overdraft facility.

Even if your bank account does not have sufficient funds to cover your demands, Capitec may cover for you, and this makes sure your creditors or other lenders get their money in time hence avoiding penalties.

  • Little to no paperwork

Unlike most available loans, you can get anywhere; Capitec will have your complete Know Your Client (KYC) when you open your account. They also have a general idea of your cashflows by being your Bank.

Once you sign up for the overdraft facility, you will have to go through no other extra paperwork or tedious processes. The Bank will set up the facility automatically so that they can overdraw instantly when a cheque comes in.

It also means that the creditors or other lenders will not even know that your bank account was short of the money they took.

  • Highly flexible

Arguably one of the most loved things about Capitec overdrafts is their flexibility. When you need an extra R5000, they give you exactly that; when you need R10 000, they will also give you that.

This facility is not common to many loan providers with fixed amounts, brackets, and even minimum loan amounts. With overdrafts, even a few cents that are short can be covered. This also means you only get to pay interest for the amount you have overdrawn.

Assuming that the interest rate is fixed at 5%, if you overdraw R5 000, your interest will be R250. If you take R10 000, your interest will be R500 for that month. What a flexible and friendly arrangement you can have.

Disadvantages of Capitec bank overdrafts

  • Requires monitoring of interest

Despite being averagely cheaper compared to most loan providers in South Africa, Overdrafts’ interest rates may fluctuate here and there. This means that, at some point, they may be even more expensive than a few loan providers.

This means that if your research on loan interest rates is spot on and updated, you may realise the need to avoid taking overdrafts and opt for some loans with better terms.

  • Uncertainty about the overdraft limit

More often than, the Bank always does overdraft analysis to check the profitability and viability of the product. This means that they may decrease the withdrawal limit at any research point, posing a risk to your operations.

The keynote is that overdrafts are depended on the Bank’s capacity and willingness to part away with a certain amount of funds. You can’t lie on an overdraft since it can change anytime. If the Bank falls into a crisis, it also means that you will not be getting any overdrafts.

  • This may delay the debtors’ collection process.

The fact that whenever we want money, we can get it may mean that some of your debt collectors may be relaxed knowing that whatever result they get may not affect your payment to creditors.

Knowing that you don’t get your debtors on time will make you underfire with creditors and may be a driving factor in the debt collection process. This may also save your company from significant bad debts due to prolonged collection. Also, it’s critical to understand that a $1 today is worth more than a $1 tomorrow.

  • Risk of losing your assets

On very special overdrafts, though it is doubtful, Capitec may require some form of security if the overdraft amount becomes too big. Too significant amounts may mean you must attach some assets to go beyond your initial limit.

If you fail to pay the overdraft fees and amount in time, the Bank may be left with no option but to seize your collateral. This may not be good for you and your business.

What to note about Capitec Overdrafts

It is critical to understanding that bank overdrafts are not a medium or long-term solution to your financial needs. They are initially a vehicle to carry you out of your short-term financial markets—incredibly unforeseen or specific emergencies critical to your company.

Business Credit Card

This is a beautiful facility for most of your executive members or company employees when they are on business duties. The Gold Credit card will be linked to the loyalty programme, and they are as well connected to all Bidvest premier lounges at all South African airports.

Each card can be linked to any individual and put on its specific limit as the company wishes. Also, the card can be tracked to ensure that it is used within the geographical location it is supposed to be from.

Advantages of using business credit cards

  • Convenient

Credit cards are highly convenient and easy to carry. They can also be used for everyday expenses, and you can transact with them online or through a cell phone call.

  • Higher limit

More often than, business credit cards have a higher credit limit than personal credit cards. This allows you to buy even more without worry as long as you are within the company limit.

  • Accepted internationally

Many service providers internationally prefer credit cards. This allows you to travel around the world and still be able to use the same credit card. This is not possible with cash and cheques.

  • Easy monitoring

Giving credit cards to your employees makes it much easier to monitor expenditures from credit cards rather than cash and cheques.

You can even know the bank accounts credited when purchasing services, and this is helpful with bank reconciliations.

Asset financing

This facility provides you with an extended range of options to finance your business dreams, like vehicles, equipment, and many others, as detailed below.

Vehicle Finance

If you have been dreaming of any vehicle you have been dreaming of owning, then it’s time to get it. Whatever car may improve your business, and you are willing to have it when it fits your budget. Capitec helps you to pay instalments.

You can then link your Prime lending rate with your interest charges to fix your interest rates for a specific period. You will get affordable rates from Capitec partners for the best service.

Rental Finance

The Bank offers a wide range of attractive financial asset rental classes, including office automation, telecommunications products, security surveillance, medical equipment, construction equipment and computer equipment.

The portfolio is built using rental property contracts; these contracts have varying terms from 24 months to 60 months and are specifically designed for small businesses and large corporations.

Business and commercial property finance

A cost-effective and attractive real estate financing solution that provides suitable financing and structured repayment terms. You can peg the interest rate to the prime loan interest rate for some time or a specific period.

The loan-to-value (LTV) is typically 70%, and the client must provide his 30 positions. Our partner also receives competitive tariffs from CommRisk on all insured goods.

Other business products that Capitec offers

Other than the credit facilities, Capitec offers different financial products that your business can utilise, such as Transactions, savings and Insurance.

  • Transact

When making payments online, the Bank offers you online banking, EFT and debit cards,  with an R5 flat fee on all transacted amounts. This facility has been perfect and error-free for some time.

  • Savings

With as low as R1 000, you can start an investment with the Bank and earn a good return. There is no need to store your excess funds in a safe if you can make good money from saving with Capitec.

  • Insurance

Together with CommRisk Insurance Brokers, the Bank provides you with an extensive range of insurance options and policies that can cover yours effectively. They range from short-term to long-term insurance designed to suit your needs.

 

 

 

 

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