What to Know About Online Loans in South Africa – Our Guide

August 08, 2019

The internet was created to assist humankind in their many ventures. Thanks to this revolutionary technological innovation, anyone seeking a loan can easily voice their needs online. Although online loans were never designed to endanger the user, they shouldn’t be taken lightly. After all, it’s just like how a car isn’t dangerous until someone drives it carelessly.


The Opportunity That Online Loans Provide

For anyone who cannot physically access a bank, online loans are great opportunities. An example of an online loan is the Payday Loan. This type of loan has rescued many people from emergencies. This is why payday loans are sought after. The very fact that you can easily apply for a loan online and that it is accessible quickly is in itself remarkable. 

Students now have the power to compare different loans, all because of the internet. It is all fun and games until someone gets hurt. Online loans are dangerous to those who aren’t too familiar with it. Therefore, it’s crucial to be educated on how online loans work and how you can utilize them safely and effectively before looking to take one out yourself.


Signs for Safe Online Loans

There are some ways you can tell if an online loan is safe. First, a good creditor must be registered with the National Credit Regulator.  Second, the creditor should be part of a well-known institution or a body such as the Banking Association of South Africa. It’s also a good sign if the institution has a physical address. 

Another way to tell if the loan is legit is if the creditor asks you questions such as for your credit score. You can also check other sources such as the news and web reports on the company. Fortunately, if you’re in South Africa, you don’t really have to worry about online loans too much as it is ranked very high in terms of banking and financial services.


Dangerous and Risky Loans

No matter how reputable or genuine a creditor is, any loan can become hazardous if you aren’t careful. If you cannot pay off an expensive loan, you will end up far worse than you started. Other investments such as payday loans and auto title loans are well-known for their extremely high-interest rates. These loans charge daily interest if you cannot meet your commitments. If left unchecked, you will soon be left facing triple-digit interest rates.


Illegal Lenders

Unfortunately, the internet is a place for unlawful activity does take place. There are plenty of legitimate people and businesses, but there is a fair number of illicit lenders as well. Unlicensed lenders can continue lending money and collecting money anywhere on planet Earth.

To be sure you’re working with a legal creditor, check with the state regulators if the creditor is allowed to conduct business. Every real lender will never forget to register their license. This is an extremely important step as if you ever come to argue with a lender somewhere else in the world, you have little-to-no chances of winning.


Be Wary of Exploitations

When you’re looking for a lender, chances are that you are desperate. Be careful not to blind yourself with an enticing loan that hides high-interest rates. Here are some ways you may be exploited: The interest rate is higher than allowed in your particular state. 

Renewing your loan more often than approved by the state causing you to pay a fee every time it occurs. Combining extra packages such as life insurance with your credit without your approval. The final sign that you’re working with an illicit lender is that they illegally collect unpaid loans.

Yes, the internet and specifically online loans are designed to help aid you. However, take care that you do not take it too lightly. Make sure to do your research and choose the right creditor. It’s also crucial to make sure that you pay it off on time. Not only will it improve your credit score, but it will also save you lots of money and tears.

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.