If used correctly credit can add positive value to your overall financial well-being.
But you need to ensure that you understand what the total amount is that you will re-pay and if that amount is reasonable for the need you want to use the credit for, says Ester Ochse, product head of FNB Money Management.
Ochse provided the example of a person borrowing an amount of R100,000 for a period of five years. The quote that you receive from the financial institution says that you get an interest rate of 15% and the monthly instalment is R2,508.46.– that is the actual amount that you borrow. In this instance, the amount of R100,000.– that is how much the financial institution is going to charge you for borrowing the money from them. The amount that is charged will depend on your credit score.
All these amounts add up to the total cost that you will pay for the loan over the term to a total ofR150,507.60.
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