Taking a Loan

I am thinking of taking a top up loan. So, I have some questions that my credit officer hasn’t really clarified:

  1. Being that the existing loan is on a reducing balance, does that mean that there will be a cost incurred given that the existing amount will be combined into a new loan and thus the advantage of lower interests enjoyed towards the end of the term lost?
  2. Will they clear my existing loan principal or will it be principal +interest?

Uko kwa shimo.
Mbona unataka kuendelea kujichimbia?
Are you employed by the TSC?
If the initial loan never improved your dwindling fortunes, will another loan help you?
Take a 3 day break.
Think about your finances, your spending, and what you can do to earn extra income. Am sure hakuna mtu atakufa ukikosa kuchukua top up

Brathee, soma tena. Hakuna pahali nimesema the initial loan haikunisaidia ama haikufanya what it was intended for. FYI, I am planning on expanding my biz; so meza wembe kama ulingoja thread ya ‘dwindling fortunes’

  1. The existing loan amount will be deducted from the loan that you will receive i.e it will be paid off from the loan you will take.
  2. You will be charged a certain fee by the financial institution for taking the top up.
  3. The new loan will thus be just a single loan.
    NB: If you truly feel that you need the top up, go ahead and take it. Hiyo pesa si ya mama ya mtu. Na ni wewe utailipa sio wale wanakwambia upussy!

Refer to @ChifuMbitika comments above.

pay off the first loan kabla uchukue ingine… fees ,interest rates, na other charges will add up… utajipata ukilipa loan for years

Dont take the loan unless you have no other option. The top up is considered a new loan. And it pay off the previous loan.

#1 Principal amount and any interest due(most banks calculate interest daily) will be paid from the new loan. Some banks charge top up feee. You will be charged loan processing fee of new loan amount.
#2 They will clear outstanding principal + interest due on current loan

NB: Reducing balance has no advantage if you are not prepaying the loan. If you know you will pay loan till the end of the term concentrate on interest rate.

For the first loan, it is really important to get really informed about the loan that you take. Here friendlyfinance.co.za, you will find all information that you need. On that website, you can find banks that give people the opportunity for the first loan. I am really curious about what type and for what are you going to take the loan. There are banks that can deny the loan because of the reason that you have. I strongly suggest you read more information on that website before taking the loan. Good luck!