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Payday loans for bad credit
Do you need some extra cash but have a bad credit score? There are options available to you.
People who have bad credit aren’t usually eligible for traditional finance options, but can consider a payday loan if they meet the eligibility requirements. Use this guide to help you understand the application process, and the pros and cons, of payday loans for bad credit.
About bad credit payday loans
Payday lenders have different criteria than other credit issuers. This is how they can offer loans to borrowers with negative listings on their credit reports. However, the lender will still complete a credit check and applicants must meet the eligibility requirements. Lenders will consider your current employment, earnings and forms of income. Lenders will also consider your recent bank statements to determine if you have the ability to repay the loan.
Compare payday loan options in South Africa
Will I be eligible for a bad credit payday loan in South Africa?
The requirements will vary between lenders and specific loans, but typically you’ll need to meet the following:
- Residency. You may need to be a South African citizen or Permanent Resident.
- Age. At least 18 years of age.
- Income. Receive a regular income past a specified threshold.
These are just some examples of the criteria you may need to meet, so make sure to check the specific eligibility requirements when you’re comparing your short term loan options.
The features of a payday loan
Here are some of the features, fees and conditions that you can expect when you apply for a payday loan:
- Online application. Applicants can apply for these products online. The application usually takes a few minutes and applicants should receive a response immediately. Our guide explains more about online payday loans.
- Turnaround to receive funds. Turnaround times to receive the loan can vary between 1 hour and 24 hours, but most lenders will at least offer a one-day turnaround.
- Different loan amounts. These lenders offer various loan amounts that often depend on your monthly income.
- Term of loan. Loan terms can be as short as a couple of weeks, or last for longer periods. Some lenders allow customers to repay the loan early without paying a penalty fee.
- Repayment. You’ll need to repay a set amount at regular repayment intervals (such as fortnightly). Depending on the loan, the repayments may be based on the customer’s pay frequency and aren’t as flexible as some other credit products. The repayments can be directly debited from the customer’s account to the lender to avoid missing any payments. Some lenders allow customers to repay the loan early without penalty, but this will vary between providers.
- Fees. Lenders will charge high fees for rescheduling your payments, or for any late or missed repayments. You may be charged an establishment fee and a monthly fee – these are usually a set percentage of the amount you’re borrowing. The rate at which these costs accumulate differ according to who you borrow with.
How to choose a bad credit payday loan in South Africa
There are many bad credit payday loans in South Africa, so it’s important to compare options and to ensure that the loan is right for you. Here are some of the factors that applicants should consider when weighing up their options:
- Compare the lenders. Lenders will have the right to access a customer’s bank account details, so you need to be sure they are trustworthy and have a good reputation. When researching options, read through the policies and loan terms, contact the lender’s customer service team to ask any questions before applying and read through reviews and testimonials online.
- Confirm the fees and interest rates. Payday loans charge higher fees than most other personal loans. Compare the establishment and monthly fees charged by different lenders. Applicants should make sure they can afford these fees before applying.
- Loan extensions and redraws. Some loan companies can extend the term of the loan up to 90 days. Customers will be charged extra fees associated with this, so it should be avoided if possible. Before you sign anything, customers should ask what the terms and conditions are if they’re unable to pay back the loan on time. This includes any additional fees that will be charged if the customer can’t pay the loan back within the original loan term.
Pros and cons of bad credit payday loans
- Online application and turnaround time. Eligible applicants can apply online and receive a response shortly after submitting an application.
- Fixed rates and charges. The costs are fixed and won’t change throughout the loan repayment term.
- Bad credit history. Most credit issuers won’t approve people with a bad credit history, so this is an option for customers who have negative listings on their credit report or a poor credit score. Other eligibility requirements still apply and if a customer is unable to make timely repayments, a payday loan could further hurt their credit history.
- Higher fees. The fees are higher than for most other personal loans, which is why it’s important to pay the loan off in full during the repayment term.
- Payday loans are not a long-term solution. Payday loans are not a quick fix or a long-term solution. It won’t help minimise overall long-term debt and people should seek help from a financial adviser if they’re struggling financially.
- Dishonest lenders. There are some fraudulent lenders operating online. Customers must do their research and ensure they’re not applying for a loan with a dishonest lender before applying.
Frequently asked questions
Will a lender perform a credit check during the application process?
Typically, the lender will complete a credit check and applicants must meet the eligibility requirements. However, there may be lenders on the market which offer no credit check loans (although these are less common). It’s a good idea to check the credibility of each lender you compare. Looking for credible online reviews and signals that a website is professional and trustworthy are a few tips you could keep in mind.
What happens if I am late with a repayment?
Late repayment of your loan will result in extra costs to you. Also, it could have a negative effect on your credit rating. Payday loans are considered to be a risky form of borrowing that should be considered as a last resort: they aren’t suitable for managing existing debt.
How does the process of applying for a payday loan actually work?
Applying to get a payday loan for bad credit can be a straightforward process. If you’ve compared your options and are sure that you meet the eligibility criteria, you can start your application by clicking the “Go to site” button in the table above. After you enter the required information on your chosen lender’s website, your financial status will be assessed and a decision will be made soon after.
To help speed up the process, paperwork tends to be minimal with this type of short-term borrowing – and some lenders may be able to offer a same-day loan payment.
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