Instant payday loans are quite new in South Africa, but they’ve gained popularity because of their accessibility.
What are payday loans? Is it possible to get one without doing any paperwork? How different is it from other personal loans?
What are Payday Loans?
An instant payday loan is a form of personal loan that’s easy and convenient to obtain. Most of the time, creditors don’t require any paperwork to be done and don’t conduct credit checks before they approve a loan request.
People often apply for instant payday loans in South Africa for emergency expenses. Car breakdowns, medical emergencies, and house repairs are the common reasons people borrow money from payday lenders.
The convenience and accessibility of instant payday loans may have a drawback, though. People may get it for less serious reasons that aren’t, in any way, urgent or necessary.
Remember that instant payday loans are meant to be repaid in the shortest time possible. They have really expensive interest rates and because of this, they shouldn’t be used to settle your other loans.
It’s strongly suggested by financial experts to have an emergency fund that can cover your living expenses for at least 3 to 6 months. However, there may be times that your emergency fund may not be enough and you need additional funds to take you through critical situations. Instant payday loans work best in this scenario. Get only instant payday loans when your emergency fund is below critical levels.
How to Get Instant Payday Loans?
Instant payday loan providers have easy application processes. Usually, they will require you to fill out an online application form and that’s it! They won’t require you to submit any document to back your request.
Almost all lenders require the simple criteria listed below to get your loan request approved:
- You must be at least 18 years old
- You must have a bank account in South Africa that’s active and in good standing
- You must have a monthly income that amounts to a certain value according to the requirement of your lender
Most lenders prefer to approve requests from applicants who have a permanent job or a regular income stream. Self-employed individuals are still welcome to apply, though, but may undergo a slightly stricter process before getting approved.
Usually, you can borrow any amount from R500 to around R10 000. Some may even provide more, depending on your situation and financial capability.
After assessing your application, they’ll call you to confirm a few things. You’ll be notified via SMS, email, or phone call regarding the status of your application.
Once your request is approved, the money will be deposited into your bank account. Funds can be transferred to your account within the day so that you can resolve your financial issues the soonest time possible.
Most instant payday loans are required to be repaid after one month or within 40 days, complete with the interest incurred for the said period. Some lenders, though, like Wonga, offers a longer repayment period. You can repay the loan in as short as 4 days or have it paid in full within 6 months.
On the due date, the owed amount will automatically be deducted from your bank account together with the interest incurred.
Don’t forget to repay your payday personal loans to avoid getting charged with late fees and reactivation fees. Late payments will not only cost you a large sum of money but also earn you negative points on your credit score.
Existing and recurring applicants are usually given special treatment in terms of how much they can borrow and how fast they can get the amount requested.
Where to Get Payday Loans?
You won’t find banks offering instant payday loans in South Africa due to the high-risk nature of the debt. However, you’ll find many alternative lenders offering this type of personal loan in SA. Most of them require little to no paperwork to approve your request.
Some of the most reputable short-term lenders in SA that can provide small loan amounts in an instant are Little Loans, Mulah, and EasyPayday. They require no paperwork at all to get your loan requests processed. You just have to supply them your banking details and some information about you and your work.
Popular and more established lenders like Wonga may require you to submit some paperwork, though. They may ask for your most recent payslips or bank statements to ensure you can handle the repayments and the loan will not sink you further into debt.
Although instant payday loans are readily accessible, you should use them sparingly. This type of personal loan has very high interest rates and is designed to be repaid immediately. You should not use it like any other short-term loan that can be used to buy luxuries and pay for less urgent things.
Before obtaining an instant payday loan, make sure you understand all the risks it entails. A slight miscalculation on your part can get you into a bigger financial problem.