While managing your finances isn’t the easiest thing to do in this day and age with prices constantly increasing and expenses piling up overnight, many of us give it all we’ve got and, manage to get by.
The real issue arises when something unexpected happens and the usual budget gets thrown out the window. This can be anything from your car breaking down or your geyser bursting to a child's birthday or upcoming holiday that you simply don’t have enough for.
In such a case, you may need a little extra cash to get things done and, if you're like the rest of us - you need it as soon as possible. This is where payday loans come in - they can be obtained quickly and provide small sums of cash to help us get by when money is tight and pay day is nowhere in sight.
Defining a Payday Cash Loan
An payday cash loan can be considered both an instant loan and an unsecured short term loan. It's essentially one of the quickest ways to borrow money and typically involves an online lender or pawn broker. While no loans can be credited instantly, there are many lenders who come quite close and, offer some of the shortest processing times and fastest payouts in the country.
The term "payday loan" is used because the micro-loan is typically repaid in full on the borrower's next payday. In addition, many payday lenders allow customers to create an account which then enables them to log in and make a loan request which is then immediately approved and transferred to the holders account.
For the purposes of this article, we will consider a payday loan to encompass any cash loan that can be processed in 24 hours or less and, is repaid by the borrower within a maximum of 40 days.
Who Offers Payday Loans?
In the US and UK payday loans are generally only offered by payday lenders who typically have a bad reputation as loan sharks that take advantage of people who are having financial problems.
Luckily for us South Africans the payday lenders we have aren't quite so volatile and we can get a payday loan from just about anywhere. One of the most common places to get one is from a payday lender like Wonga and Fin Choice who offer quick loans 100% online.
You can also get a payday loan from a bank and this is likely to be your best options since the rates will typically be lower and, since you already have a relationship with the lender you could have the money approved very quickly.
Although large banks may not call their 30-day loans "payday loans", they are in essence, the exact same product since they are taken out almost instantly and have to be repaid on your next payday.
Benefits of Payday Loans
While personal loans can certainly offer you a convenient and affordable cash boost when you're low on money payday cash loans have many advantages that these types of loans don’t have.
One of these advantages is the obvious time aspect. With a personal loan you may have to wait day and even weeks to get the money credited to your account while a payday loan is typically credited within minutes of being approved.
Personal loans from banks also only offer larger cash amounts - which isn't ideal for people who only really need a small sum of money to get by until their next pay day comes around.
Finally, while you need to have a good credit record to get approved for a personal loan, you only need to be employed and earning a regular income to be approved for a payday loan.
Payday Loans are Ideal for you if you:
- Need a small amount of money - typically between R 100.00 and R 3,000.00
- Are employed full time and earn more than R 2,000.00 per month
- Do not qualify for a pre-approved cash advance from your bank
- Need money in a hurry
- Don’t want to go into a branch or office to apply for a loan
- Have a poor credit score
Payday Loans are not Ideal for:
- Those who are unemployed and do not have a stable income
- Long term cash flow problems
- Those who need to borrow more than R 3,000.00
- Those who have multiple debts or already have an existing payday loan
How Payday Loans Work
Payday loans are among the simplest types of loans on the market. They usually offer loan amounts of between R 100.00 and R 3,000.00 and carry a loan term of between 7 and 30 days.
Most payday lenders operate entirely online but there are many walk-in offices around the country where one can get such a loan. A borrower will make a loan application online and either upload a range of supporting documents via the internet, fax or email them over to the lender.
The lender will then check the information provided as well as the supporting documents and possible conduct a credit or ITC check. If the borrowers identity, employment and ITC check all get the green light the lender will send a loan agreement form which contains all the details of the loan offer.
Once signed, the loan will then be credited to the borrowers account within a space of minutes. The loan is then repaid via a direct debit order on the customers next payday.
How to Compare Payday Loans Online
Comparing payday loans may seem simple but, with lenders generally being quite vague about their interest rates and fees it is anything but. We have provided a comprehensive list of payday lenders and recorded their listed Annual Percentage Rates (APR's), minimum and maximum loan amounts as well as their average loan processing time and a range of other useful information to help you make an informed decision.
Using the APR to compare these quick loans is the best way to work out how much the loan will cost since this rate includes both interest and fees that will be included in the cost. You may also want to consider how much the lender is offering as well as whether or not they work with people that have a poor credit history.
What you Need to Qualify for a Payday Loan
In order to be eligible for a payday loan you must be a citizen of South Africa and in possession of either a bar-coded green ID book or a smart ID card. You also have to be employed on a full time basis and earning a minimum of R 3,000.00 or more per month.
In addition, you will be required to provide some form of proof of residence and 3 months worth of bank statements. These documents will have to provided to the lender in electronic format and some may require the documents to be certified.