What to Know about Different Types of Personal Loans in South Africa

Aug 29, 2019

Emergencies can and will happen. Chances are you don’t have enough cash available to repair a broken appliance, your plumbing, or pay for any sudden, unexpected expenses. In cases like these, the best way to handle the situation is to get a fast loan? 

Fast loans are loans that you can apply for, after which the money will be deposited into your account as quickly as possible. There are different types of fast loans out there. The most popular ones are personal loans and payday loans. Other types include payday alternative loans (PALs) and pawn shops.

In the next section, we’ll learn more about each type of fast loan. You can assess them and figure out which particular option is right for your financial needs and situation. Here’s what you need to know about the different types of fast loans.

Personal Loans

First, we have a personal loan. A personal loan is said to have a low Annual Percentage Rate (APR) with an extended loan period. This type of loan makes payments more affordable. You can apply for a personal loan from an online lender, a bank, or a credit union.

In most cases, personal loans are unsecured, which means that you need not pledge collateral to qualify. A lender will determine whether you qualify for a personal loan or not by checking your income and credit history. If your application is approved, you can receive the funds on the same day. At most, it won’t take more than five days for you to get your money. As for the terms, you have one to five years to pay.

Payday Loans

Next on the list is the payday loan. Simply put, a payday loan provides relatively small funding and fast release. However, the cash given is at relatively high financing rates. Typically, you pay a small fee to borrow, and you’ll pay the loan using your next paycheck.

Payday Alternative Loans (PALs)

As the name suggests, this is an alternative to a payday loan. For this type, you can get small loans at a reasonable price offered by some credit unions. This type of loan was designed to prevent customers from relying heavily on high-cost payday loans.

A PAL usually comes with low application fees, relatively low rates, and a longer repayment period than most payday loans. Therefore, it’s much easier to finance on PALs than payday loans. Overall, PALs are better compared to payday loans.

Pawn Shops

In a nutshell, a pawnshop lends you money in exchange for your belongings. The goal is to repay the loan before the items are sold.

You’ll leave a valuable item with the pawnshop in exchange for cash. You are obliged to repay the loan within a certain period of time. If you complete the payment, the shop will have to return the item to you. If you fail to do so, the shop owns your item. They will then have the right to sell it to the public. Please be advised that in this case, loan fees such as interest, storage fees, and set-up charges, among others, can also add up. 

If you’re looking to apply for a personal loan in South Africa, get in touch with us today to see how we can help.