Online loans are now available to everyone in South Africa. There are several types to choose from to suit different needs. Look at the options below and find the right type of loan for you.
Who can apply?
To be eligible for a cash loan from an online short-term lender you will need to meet their minimum criteria. These criteria usually include:
- Be a South African resident
- At least 18 years old
- Employed with a regular income
- Own an active bank account.
It doesn’t mean you’ll be approved if you meet these criteria. The lender will still need to review your personal information and credit history to decide if you can afford the loan repayments. Luckily, online providers use smart decision tools and can do this review very quickly. This means it won’t take long for you to know if you have been approved for an online loan, getting access to the money you need.
Is it the right choice for me?
A small, short-term loan could be right for you if you need urgent money help. They are also useful for consumers with a bad credit rating as short-term lenders and more interested in your current finances rather than your credit history. This means you are more likely to be approved with a small online lender compared to a personal lender if you have struggled with money in the past but do not any longer.
You can apply for a short-term loan with Friendly Finance. Click here to begin your free loan search.
A personal loan is a larger amount of money borrowed over a longer time. They are used for a wide range of reasons such as buying a car, a new kitchen, a wedding, or to help with unexpected bills, like replacing a new boiler.
Personal loan amounts span from R1,000 to R300,000. Usually, they are an ‘unsecured line of credit’, meaning you don’t pledge any collateral in the form of security. The length of the loan can range from 1 – 84 months and you must be 18 years of age and hold a South African ID, such as a driver’s license or passport.
You will need to earn a minimum of R2,000 per month and have a bank account no less than 3 months old. You will also need to provide either the last 3 months’ pay slips or bank statements demonstrating proof of income after tax and general outgoings. Some creditors will require you to show ‘full time’ employment for a minimum of 6 months to qualify. Providers will charge a one-off initiation fee and a monthly service fee. The service is on average R57 and the initiation fee amount will be dependent on the loan amount and loan term.
When considering taking out a personal loan, the first question needs to be – How much do I need and how quickly can I realistically pay it back?
The amount of interest you pay back is influenced by the time period. For example, you borrow R10,000 at 20% interest over 48 months, you would pay back over R14,000. For R10,000 borrowed at the same rate over 24 months, the total repayment would be just over R12,000. Based on these two scenarios, you can see how the length of the term affects the total repayment amount.
As a general rule, it’s always a good idea to pay off the amount borrowed from the lender in the shortest time possible. This all depends on the affordability circumstances of the borrower to avoid prolonged interest charges. Please note that all loans require monthly repayments and failing to keep up with these could result in a negative impact on your credit score. This can affect your ability to access money in the future, so it is worthwhile keeping in mind! The interest rates you are offered will vary depending on your affordability and credit rating.
Is a personal loan right for me?
South Africa has one of the tightest and most transparent lending policies in the world. The National Credit Act (NCA) is on-hand to help consumers who advance into credit agreements with lenders. Before you sign any agreement, all available rates and charges should be made available to you prior to making a decision. If you are not happy with the rate or you feel you can get a better rate elsewhere, take a further look around the market and find the right financial solution to meet your personal needs.
Friendly Finance can help you with your personal loan search as we work with a range of well-established and trusted lenders. You can apply to all of them through one, free application. Click below to start.
A secured loan is where the borrower puts up an asset as collateral against the loan. The lender can then take ownership of the asset if the loan is not fully repaid to recoup their money. The most common items accepted as assets are vehicles, boats, jewellery, artwork and antiques. The lender will appraise your item at a percentage (up to 80%) of the asset value. The item is given to the lender during the term of the loan and is returned once it is fully repaid. You can be approved for a secured loan in under 48 hours. As they do not usually require a credit check, it can be a more viable option to receive a larger amount of money, if you have a poor credit rating.
Loan factors worth knowing
It is always good to look for a cheap lending option. Here are some factors that will affect the cost of borrowing:
- Term – The term refers to the length of time given to repay loans in full. To reduce the cost of borrowing, try to repay the loan as soon as you can afford. Borrowing over a longer period will make each repayment less but will mean you are paying interest for longer, so the total cost of borrowing will be more.
- Interest rates – The interest rate is a cost of borrowing usually represented as a percentage of the loan amount. A lower interest rate will mean a cheaper loan.
- Credit record – The best interest rate offers are usually reserved for customers with excellent credit records. You can check your credit record for free with one of the credit bureaus in South Africa. If you have a bad credit score, it may impact your approval chances, so try to take proactive steps in improving your financial situation.
- Early repayment – You will incur fewer interest fees if you repay a loan early. However, some lenders will charge for early repayment privileges and, depending on the amount charged, it may be more cost effective to stick to your loan repayments. Look out for early repayment fees whilst searching for a loan.