Have you ever felt the need of urgent cash for an emergency or unexpected expenses? Ever thought about taking a quick cash loan? If yes, you should know payday loans online. Actually, this is a new concept in South Africa, but not new in the western world.
For some people, a payday loan is like a helping hand in an emergency and for others, it’s a quick supply to pay monthly bills until he/she gets next paycheck. However, taking easy payday loans require one to follow certain steps and processes. On that note, those looking for urgent money would find this article extremely helpful in knowing what is payday loans in South Africa. Read on.
In the following paragraphs, you will know what are payday loans and how do they work.
- What is a payday loan in South Africa?
Emergencies and urgent expenses may strike at any time. In these situations, a payday loan will be a big help. It’s a small and unsecured loan, sometimes referred to as “cash advances”, that is given for a short term.
You can generally borrow a few hundred to a few thousand rands and can repay with your next salary or earning. Furthermore, you can pay it in full or in small equal instalments within a few weeks or months.
- Why payday loans are popular?
People with fixed and stable income often opt for this type of easy borrowing since they can easily pay it back. On the other hand, it is also popular due to the easy process and no requirement of security.
In South African loan market, Hoopla Loans and Wanna Loans are some of the popular lenders who offer the best payday loans to people looking for quick cash.
- Who takes a payday loan?
A payday loan comes with a high-interest rate and is suitable for those with good credit and employment record. Therefore the major part of payday borrowers consists of people having a stable income. If you have a regular income and good past record, you can go for this type of quick loan.
- Applying for a payday loan
Applying for online payday loans with no credit check and instant approval in South Africa is easy with some lenders. Since this is an unsecured loan, the amount you can get between R3000 to R8000. If you are a first-time borrower, you can get up to R3000. The risk on the lender’s side is higher, so they generally prefer regular borrowers and approve their loan quickly with the maximum possible amount.
- How much payday loans cost?
The rate of interest for a payday loan is up to 5% per month. However, it may vary between lenders and can be up to 60% per annum. The limits on the lending amount and interest rate are set by the National Credit Act and National Credit Regulator in order to protect South African people unaware of the risk involved with payday loans.
- What is required for a loan?
Below are the requirements to obtain a loan in South Africa:
1. A valid ID issued by the government
2. A bank statement of the previous three months
3. 3 months salary slips or proof of income
Note that the requirements depend on companies lending policy. It would be harder for a person to get payday loans when unemployed. However, if you have an alternate source of income, the company may consider your application.
- How to apply
Most lenders provide urgent payday loans with no credit check in South Africa. You can select an amount and repayment period, and submit an application form filled with accurate information online. The lender will decide if your application can be approved based on your repayment capacity.
Generally, the process takes only a few hours, but some lenders may take one banking day for assessment. Once your loan is approved, the money generally gets transferred to your bank account instantly.
- How to get a large loan amount?
Payday loans in South Africa help people fulfil their instant cash needs. Therefore, most lenders lend up to R8000, and the first time borrowers generally get up to R3000. Repaying on time or earlier will increase your chances of getting a maximum amount in your next loan.
If you are looking for a larger amount, you should look for a long-term loan. Note that a long-term loan requires security apart from many other documents to ensure the lowest default risk.
- Loan application processing
Payday loans are available online. So you have to submit an online form along with soft copies of your documents. Once your application is received, the company starts processing it in below steps.
1. The company will assign it to a loan processing officer.
2. The officer will check your details and inform you about the decision.
3. If your loan is approved, you will be notified by a phone call, SMS or an email and your fund will be sent to your bank account.
Top lenders generally provide instant payday loans at no paperwork in South Africa. However, some may take more time and have longer procedures. Lenders like Hoopla Loans can consider your application even if you have a bad repayment record in the past.
- Client data security
Your data security concern is obvious when you are submitting your information online. But lenders are also bound by law to keep client’s data safe. Data collected through the online application form is encrypted so only the lender can see it.
- Repaying a payday loan
Easy payday loans come with interest charges and late payment fees. So think about your repayment capacity before you decide to take a payday loan. Also, take the amount that you can pay within repayment terms.
- Repay loans on time
Always pay on-time to avoid a late fee and bad credit so that you can get another loan in the future. Needless to say that if you can pay early, it’s welcome by most of the lenders. It will set you free from the debt and would increase your credit score. Note that good repayment history helps in getting more and quick online payday loans in South Africa when needed.
- Risk of not paying on time
Nobody would want extra cost on a loan and negative credit rating. On that note, you should repay loans on time. As mentioned above, charges for late or failed payment are high and can destabilize your financial condition in the next month.