How does Payday Loans work?
Payday loans are designed to assist the person borrowing the money to pay for unforeseen expenses during the month that may occur at a time they may not have the cash to do so. These cash loans are to be repaid within a few days time or a month’s time depending of the financial institute providing the money.
This is why the loan also goes by the name “payday loan” because the time given to repay the loan is usually 1 month, in time for your next wage or salary.
Many certified financial institutes offer these types of personal loans and they are easy to come by. You can often borrow anything small from as little as R 100.00 to R2 000.00 depending on the financial provider’s terms and conditions.
Are These Loans Expensive?
Unlike regular loans, the payday loan is considered one of the more expensive forms of quick cash loans. They generally have a higher interest rate and failure to repay on time will result in the loan increasing and becoming more expensive.
What Are The Advantages of a Payday Loan?
- You can apply for most payday loans online
- You stand a better chance of being approved for a payday loan than a long term cash loan
- Use it to pay any emergency expenses you may have during the month until your next salary or wages comes through
- Quick and easy application
- Get the cash you need in advance
- There is no need to have a good credit history to apply for this loan or to be approved for it
- Get your approval results fast
- Online live chat (help online) for any questions or queries you may have concerning the loan and its conditions
Just as there are, advantages to this form of loan there are also disadvantages so make sure that you are fully aware of both before applying for this type of quick cash loan.
What Are Some Of The Disadvantages of a Payday Loan?
- An interest rate that can quickly rise if payment is not made on time
- Only a small amount of cash is made available to the borrower
- You only have a short time in which to complete the loan payment (a few days or a month)
- Failure to pay on time or at all will result in aggressive debt collection procedures
You need to be a South African citizen to apply for a payday loan in South Africa. You also have to be at least 18years of age with a steady income or salary of more than R1 500.00 (this is also dependant on the financial institute you choose to lend from). You must have a South African bank account as well as a South African ID.
Weigh your options and think carefully if this type of cash loan is for you. It can alleviate many of your unexpected expenses easily but it can also become a problem if you cannot afford to pay the loan back.