Are you someone who plans your budget every month to keep a track of your expenses? Does this budget include unexpected expenses? Probably not! Most people create a budget based on their regular expenses.
But when an unexpected expense such as a sudden trip to the hospital comes up, people fall short of money. And the situation gets sticky if you haven’t got your salary yet. And in times like these, you need immediate cash that will help you cover your finances.
This is where a payday loan comes to your rescue. But do you know what payday loan is exactly and how the process works? If not, don’t worry! We have got you covered. In this blog post, we will give you the complete A-Z of payday loans that will better prepare you when the time comes.
Payday loan: What is it?
As the name suggests, a payday loan is a type of short-term loan where you get a small amount of money until your salary arrives. Once your salary gets deposited into your account, you need to pay back the loan.
Since this is a short term loan, you need to pay it back as quickly as possible. The loan also has higher interest rates, so it is beneficial to pay it back ASAP.
Payday loan: How do they work?
- Compare: Start by comparing different payday loan offers available on our website Snappy Loan. You will find numerous offers from lenders around the country.
- Calculate: Use our online calculator to determine the repayment amount. This will help you understand whether you can afford the loan or not.
- Apply: By clicking on ‘Snap It’, you will be taken to the lender’s website where you can apply for the loan.
- Approval: After application, the lender will verify all the information and get back to you with a loan offer.
- Get Money Instantly: Once you accept the loan offer, the cash will be transferred to your account in 24 hours.
- Repay Your Loan Quickly: Make sure that you repay your loan quickly. Usually, you can either pay the amount in a lumpsum or smaller instalments. Sometimes, a lender can place a debit order on your account so that as soon as you get your salary, the amount is deducted.
Features of payday loan
A payday loan is quite popular in South Africa and you will find several lenders giving different offers on the same. You can find payday loans under the following names:
- Instant Payday Loan: In this type of payday loan, you will get your money instantly which is usually 24 hours.
- Same Day Loan: In this type of payday loan, you will get the loan amount in just a few hours
- Payday Loans for the Blacklisted: This payday loan is specifically meant for people who have a poor or bad credit score.
Other general features include:
- You can get a small amount of money (Minimum-R100; Maximum- R8, 000)
- Receive the money instantly just as your application is approved.
- Repay the loan amount quickly (Minimum loan term-1 day; Maximum loan term- 6 months)
- Payday loan has an initiation fee of 16.5% for the first R1, 000 you borrow, and then it is 10%
- Higher interest rates, typically 5% per month
- A monthly service fee of R60 per month with a VAT of 15%.
Benefits of payday loan
- Cover your emergency expenses with payday loans immediately.
- No need of carrying the debt for long. You need to repay the debt quickly.
- Payday loans are unsecured and hence you don’t need to own a valuable asset.
- The application process is fast and can be done without much hassle.
- If you are an existing customer, you get to borrow more money up to R8, 000 and quite quickly.
Risks involved in payday loan
- Delaying the repayment of a loan will increase the interest rates making it difficult for you to pay.
- This will increase your monthly expenses making it difficult to manage your budget.
- High penalty fees if you default on the loan repayment.
- This can negatively affect your ability to get a loan in the future.
- Frequent borrowing of a payday loan might result in a crippling debt situation.
Payday loan: What is the best time?
Well, truth be told, there is no best time to take out a payday loan. Most people don’t prefer taking out such short credit by having emergency funds in place.
Payday loans are taken only when it is utmost necessary. Usually, payday loans are the last option when all your other options are exhausted.
At Snappy Loan, we suggest our customers take out a payday loan only when necessary. Otherwise, wait till you get your salary or apply for a personal loan that has more flexible conditions.
Requirements for applying fora payday loan online
When you are applying for a payday loan online, you must fulfil the following requirement:
- You should be either self-employed or employed at an organization
- Valid ID issued by the South African government
- South African bank account where your salary gets deposited
- You must have a regular income that is deposited in this account. Some lenders also specify the specific amount of income you must have. Usually, it is R2, 000.
- Proof of income for the last 3 months
- You should 18 years of age or above
- Proof of residence
Payday loan: How to compare different offers?
There are several factors that you must consider for comparing different payday loan offers:
- The minimum and maximum amount offered: Some lenders will offer a limited loan amount whereas some will offer flexibility in the loan amount. Borrow what you need.
- The repayment window: Choose a repayment term that offers you the flexibility to repay your loan quickly without putting too much strain on your budget.
- Interest rates: Payday loans have higher interest rates as compared to other types of loans.
- Additional fees: You might have to pay initiation and monthly fees. This will entirely depend on the lender.
- Calculate repayment amount: Make sure that before taking the loan you have calculated the repayment amount.
- Requirements: Make sure to check out the qualification requirements of the loan offer. Different lenders have different requirements.
- How fast can you get the loan? Make sure that the lender you choose has the ability of quick turnaround when it comes to payday loans.
And to compare your loan offers, you can visit our website Snappy Loan. We have excellent payday loan offers from authorized and registered lenders and banks in the country.
You can review, compare, and apply for a payday loan with just a few clicks. If you want more information about a payday loan, don’t hesitate to get in touch with our team at Snappy Loan now.