There are many situations when we want to buy something, yet we are short on money. When that happens, taking a loan sounds like the ideal thing to do. But you don’t want to deal with long-term loans, you want a short-term loan that will cover the cost and not make you deal with any issues. That’s where the payday loan comes into play.
What is a payday loan?
The payday loan is a short-term loan that helps you cover any immediate needs you may have. Generally, a payday loan comes with a high-interest rate, but it doesn’t require any collateral. Unlike a mortgage for example, it doesn’t require you to show any documents that you can repay it. Borrowers are charged added fees in case they are not repaying the loan on time, and that’s incredibly important to take into account.
Is the interest rate fixed on a payday loan?
Yes, generally any payday loan will have a fixed interest rate. This is important because you will know exactly how much you need to pay back as interest. It’s important to note that many payday loans have interest rates like 20% or 30%, so if you take R1000 as a loan, you will have to pay R1300 back. Every payday loan provider has its own interest rate, so it’s a good idea to shop around and see which one offers the best value and results. That’s the thing to keep in mind and the experience can be a very good one.
Are the payday loans secured or not?
As we mentioned earlier, you don’t have to offer any collateral when you want to take a payday loan. That’s important to note because many loans will require collateral. But since these loans are usually made for lower values, up to R8000, they are unsecured.
What the lender will do to ensure they get their money back is they will ask you for permission to take money from your prepaid card, credit union, or bank account. It’s either that or the lender will require you to write a check that they can go and cash in when the loan is due. So, while there’s no collateral, the payday loan provider will still take some precautions to ensure they won’t lose any money.
Does this affect your credit score?
If you take a payday loan and you repay it in time, this will not affect your credit score.; That being said, the payday loans stay up to 10 years in the credit bureau archives. Generally, a payday lender won’t report to the credit bureaus. That being said, the loan can be filed if it was passed to the collector after the lender is selling this debt.
A lot of people want to know if payday loans can be forgiven, but that’s not the case. These lenders are making a lot of money from the interest rates, so there’s no chance they will just forgive any debt that can’t be repaid. If anything, they will charge you extra because you didn’t pay the loan on time. So if you do want to take a payday loan, you do need to be 100% sure that you can repay it in time. Otherwise, you might end up with penalties, and that’s certainly a thing that you want to avoid as much as possible here.
Is it hard to acquire a payday loan?
There are credit merchants which have a dedicated physical store, but you can also find online providers as well. Generally, you need to complete a payday loan application and show payslips from the employers. This shows that you are able to access such a loan quite easily, without having to worry about any type of problems.
That being said, any lender that offers a payday loan won’t go for a full credit check. So, they can work with people that have bad credit too. However, as we mentioned earlier, the interest rate can be quite high, so it’s something to keep in mind.
Are payday loans safe?
Yes, they are provided by regulated lenders, and you don’t have to worry about that. What you need to keep in mind regarding these loans is that they can have very high-interest rates. So, you do need to ensure that you can repay the loan after you get it, otherwise, it can bring financial trouble. While the loans themselves are safe, you do need to take precautions and ensure that you prevent any possible problems.
Are there any payday loan limits?
Generally, South Africa has a payday loan cap anywhere from R3000 to R8000. The idea here is that these loans need to be repaid in full when you get paid, hence the payday name to begin with. This is why you can usually get up to R8000, maybe a bit more at times depending on the lender. So yes, there are limits, and you need to talk with the lender before you take such a loan.
What happens if you’re not able to repay a loan?
It’s crucial to not borrow more than you can pay back. In case you are unable to repay the loan in time, then you will be charged a late fee. Sometimes there might be a rollover option so you can extend the due date, but that also comes with a fee. It’s important to avoid taking more than you need, as this type of loan is a last-resort loan when you really need money.
The payday loan can help you if you are out of options and you need money before you get paid from work. Getting a payday loan is quite simple when compared to other loans, and you will not have to worry about a long and tedious process. It does take a bit of time to ensure you quality and adapt to this type of loan properly, but the experience can be great. Take your time, avoid any rush, and study every payday loan option, then choose the one that has great benefits and the lowest interest rate.
Visit Express Finance to start your payday loan application – https://www.expressfinance.co.za/