What Is a Payday Loan?
What is a payday loan and how does it work are some of the questions you should have the answers to before considering one.
Furthermore, other questions you should ask are payday loans good or bad and are there problems with payday lenders.
Payday loans are a double edged sword as they provide quick financial relief whilst increasing your debt burden.
Online payday loans are short-term unsecured loans which provide access to quick cash for any reason.
Sensible people will only turn to this quick cash facility, offered in the way of online payday loans, for emergency expenses, however many use it for any vanity purchase.
The latter use of the easy payday loan facility ultimately leads to increasing borrowing & the downward debt spiral.
FAQ – Online Payday Loans South Africa
What is a payday loan and how does it work?
How payday loans in South Africa work, is that a lender provides the borrower with a short-term, unsecured loan that is to be paid pack, with interest, on the borrower’s next payday.
Are there payday loans for blacklisted people?
Getting payday loans for blacklisted people is no problem as most permanently employed applicants will qualify.
Therefore, payday loans for bad credit applicants will be granted in South Africa as long as they are SA citizens, have a bank account & have proof of employment.
Are payday loans good?
Yes, they can be a blessing for emergency cash requirements, for instance any unexpected expense.
Are payday loans bad?
Yes, they can be especially bad for people who access them for the wrong reasons a& cannot afford to pay them back.
The problem with payday loans in these cases, is that the borrower doesn’t account for the high interest rates they come with and gets into the cycle of borrowing to pay off debt.
What is the purpose of a payday loan?
They are intended for an employee as a means to get a quick & easy cash advance, to settle an emergency expense for example, before their next payday.
How much does it cost?
There’s no cost to applying for one, however they do come at very high interest rates so should be avoided if possible.
Do you need to provide collateral for payday cash loans?
No as they are designed for people who are permanently employed so that the loan amount, plus interest, is repaid to the lender on payday.
Therefore the lender does not require any collateral in the form of insurance policies or house to secure the loan as it will be repaid from the borrower’s salary.
Is it easy to get?
Convenience is a big benefit of getting an easy payday loan paid into your account.
The whole process can be done online without any paperwork required.
What do you need to get a payday loan in South Africa?
To qualify you need to be a permanently employed SA citizen with a bank account.
What happens if you default on a payday loan?
Your loan agreement binds you into a legal agreement with the lender so you may face the following consequences by not paying it back as greed;
1. Additional fees & interest
2. Significant damage to your credit score
3. Debt collectors harassing you
4. Court summons
You have options such as settling the debt for less than you owe or filing for bankruptcy if
If your debts are overwhelming you always have the option of filing for bankruptcy or applying for debt review in South Africa which will give you relief from your creditors.
How to choose an honest payday loan lender?
As there are so many payday loan lenders out there, you won’t be limited when it comes to choice.
However, do not choose the first one you see, as by doing some research you’ll see some are more reputable than others & charge less in fees & interest.
Only choose a reputable lender that is registered with the NCR.
What are the dangers of payday loans?
Payday loan lenders don’t usually have the same high standards as banks do when it comes to applicants’ credit scores.
The flip side is that they charge exorbitant interest rates & fees that could cause you huge financial distress if you’re unable to repay the amount with interest.
A better option is to increase your credit score which will allow you to access a personal loan through your bank at favourable rates.
Click this link for more information on getting Personal Loans in South Africa