Finding a line of credit
Most people at some point will find themselves in a life situation where they need extra cash. These situations can range from nasty unexpected costs like car repairs to more positive conditions such as wanting to make improvements to your home. Regardless of the need, what are your options to get hold of the cash fast? You could borrow money from friends and family or you could sell unwanted possessions to raise the money needed. For most people, these options aren’t viable. As technology has advanced, more and more people are going online to find trusted partners that offer them a line of credit. You can now get short-term loans online, with approval often the same day.
What is a short-term loan?
Short-term loans, or payday loans as they can be called, are a small line of credit offered over a short period of time – usually until your next payday. In South Africa, lenders will typically offer between R100 and R3,000 borrowed over a period of 1 to 31 days. You can apply online and, if approved, your money will be transferred to your bank account. The loans are usually repaid, in full, on your next payday.
Who can apply?
You must meet the minimum criteria of each lender to submit an application for a loan. The minimum criteria usually include being 18 years of age or older, a permanent resident of South Africa, in full-time employment with a regular income and having an active bank account. Each lender will have specific approval criteria they use to assess your affordability (whether they believe you’ll successfully repay the loan). During the approval process, the lender is likely to run a credit check on you. If you have a bad credit rating you may still be approved for a short-term loan. Unlike other loan types, payday lenders place less emphasis on your credit rating. As the loan is borrowed over a short period of time, the lender is more concerned about your current situation rather than your financial history.
How are repayments made?
When your loan is approved and you sign your loan agreement, the lender will set up a direct debit to your bank account. This direct debit will automatically take the repayment amounts from you on the agreed upon dates. The repayment amounts and dates will be outlined in your loan agreement. This means that all you have to do is make sure you have enough money in your account on the set dates.
A payday loan can be of real assistance when you are in need of cash fast. However, it is very important that you are confident you’ll be able to meet the repayments. If you cannot pay back the loan on time, there is a chance you will incur additional fees and interest on the loan. You will likely continue to incur fees until the loan is repaid, which can lead to a cycle of debt that may be hard to break.