4 Tips to Know before Applying for a Payday Loan in South Africa – What to Know

Sep 11, 2019

 

Easy access to credit is hard to find for many cash-strapped South Africans, especially in times of emergency. It could be due to sickness, a lay-off, or the death of a family member. Payday loans or cash advances offered by microlending institutions may provide the instant cash they need. Nevertheless, before deciding to apply for a payday loan, think about it carefully first, as there are risks and responsibilities involved when trying to obtain instant credit. 

For instance, payday cash loans typically require borrowers to pay back the money in full, including interest, two weeks to a month after receiving the money. Payday loan interest rates, however, are very high. This makes it difficult for those who have no job or have a low income to pay off the loan. Worse, unexpected things may happen that may prevent them from paying back on time. To mitigate these issues that come with a payday loan, here are some tips you should know before applying.

 

Try borrowing money from a friend or family member

Look for other cash options and treat payday loans as a last option. You can try borrowing money from a friend or relative who will not charge you interest or pressure you to pay back quickly. They are likely to be more forgiving and considerate, compared to a lending institution. 

 

Understand the risks and responsibilities of payday loans

Unlike mortgages and other types of loans, payday loans won’t require you to undergo a credit check. It is a short-term loan that you need to repay within a month or less after application. While it provides fast cash without credit checks, the downside with payday loans is that the interest payments are very high. Surcharges for late repayment are even higher. 

If you are planning to apply for a loan, make sure you have a measure in place that would enable you to pay back on time. You can try looking for a part-time or sideline job first. You can also consider investing part of the money you’ll borrow in a small business. Boosting your income before the due date would provide you with the money you’ll need to repay on time.

 

Do your research

Do your research first before choosing a lender, as many companies offer payday loans. Also, check if the lender is licensed by the National Credit Regulator (NCR).

There are also lenders you don’t want to deal with, such as deceptive loan sharks. Research the lender’s background as best as you can and gather information about the company’s previous lenders as well to see their experience. You can research online and ask your friends, neighbours, and colleagues about the company. 

 

Check your qualifications

Although applying for a payday loan is generally straightforward, lenders will require proof that you have a regular income. Because of this, if you’re a freelance worker, your payday loan application might be rejected.

Before making any financial decisions, make sure that you are in a proper state of mind to make the right decision. With these tips, you increase your chances of getting your loan application approved.

 

Once you know the tips and still need the loan, we’re here to help! Apply for a personal loan online now via Hoopla Loans.