Payday loans in South Africa
What is a Payday loan in South Africa?
Often times in life, we are confronted by situations that require a small amount of cash quickly. It could be a hospital bill that needs to be settled quickly or a car problem that has left you with no transport. Whatever the problem, we all go through that crisis where we haven’t even got past the month halfway mark and we need cash and the cash is not available.
That is where Payday loans come into action. Payday loans are short term loans available in South Africa. Payday loans are short term personal loans of low value. Most payday loans are for a maximum of R8,000.00.
Payday loans must be repaid by the next pay date, so they are usually paid back in one instalment. Sometimes a payday loan is taken just before your payday which means your repayment date can be the next pay date after the one that is coming up. This is because most payday loans will have a maximum repayment period of 41 days. This means that most payday loans are structured to give you that financial relief for up to 41 days. So, if you are taking out a payday loan, talk to the provider and see if they can stretch your repayment date out to your next pay date by giving you an extension on your repayment date up to 41 days.
Payday loans are usually very quick to be approved or declined. Payday loans South Africa are usually applied for online, so the process is very fast. While credit checks are done on any loan applicant, a blacklisting does not dismiss someone from getting a prepaid loan. The system will look at other variables like stability of income or the income statement of the individual. For this reason, payday loans have become a hit with South African borrowers.
People from all walks of life are taking payday loans in South Africa. From blue-collar workers to white-collar workers, the gap between the end of the salary and the end of the month seems to be getting longer. Payday loans are fast to obtain and easily repaid.
Applying for a loan
Applying for payday loans is an easy and seamless process. The three main requirements to obtain a payday loan in South Africa are that the applicant is:
• 18 years and older
• Possess a South African bank account
• Be employed or have regular monthly income
Most payday loan providers will do credit checks on any applicant as payday loans are unsecured and there is therefore no collateral required.
In some cases, payday loan providers will not do credit checks as the loan is usually paid back on the next pay day in one instalment.
Payday loan providers like to build trust with their clients. For first time borrowers, they will lend you amounts less than R 2,500.00 in most cases. Once this is repaid, customers can apply for loans of larger amounts. You will be able to get loans of up to R 8,000.00 as an existing customer.
Loan application processing
Once you have applied for your payday loan, the process of getting your loan approved is simple and straight forward.
Using the information that you submit online including your ID number the payday loan company will then assess your risk profile to see if you qualify for a payday loan and if you do, how much you qualify for. This is done by a simple credit check.
This check will tell the company your credit repayment record. The best thing about payday loans is that even if you have a bad credit record or you have been blacklisted, your payday loan can still be approved based on the fact that you have a monthly income and your expenses normally do not exceed your monthly income.
During the loan application process payday loans providers in South Africa will make sure that the integrity of your personal information is protected. Payday loans fall under the jurisdiction of the National Credit Regulator. This means that amongst other requirements, payday loan providers must comply with the lending laws as per the National Credit Regulator.
Payday loan providers have the most secure platforms using the latest technology to make sure your personal information is safe. All information you enter is passed through an encrypted platform which makes sure no one can intercept your information.
Getting a payday loan.
Getting a payday loan is an easy part! Repaying it back should be easier, however sometimes life happens and we are not able to repay the payday loans as arranged. In circumstances like this, you must inform your payday loan provider immediately so that you can make an alternative arrangement to make payment.
You can usually get a grace period to make payment of up to 6 months depending on the payday loan provider. You must note that during this period, interest will still be added and admin fees will also be added. This is however not encouraged as it means that your credit record will be affected and you will be flagged as a slow payer.
Late payments will affect your track record with the payday loan provider. This may mean that when you next apply for a payday loan from the same provider, you will not be able to access a higher loan amount. In some cases the payday loan provider will not lend to you again even after you have repaid the loan.
Paying back a payday loan late or failing to pay back a payday loan may also affect your credit rating. This means that when you apply for credit from other loan providers of any type, you may be declined due to this bad credit rating. You are therefore advised to pay back your payday loans on time.
A bad credit record can also affect your chances of getting a new job when you apply for it. Potential employers will look at your credit record and if this is negative this may negatively affect your chances of getting the job.