Payday loans: What do you need to know?
Sometimes, your finances are not enough to get you through the month. You may find yourself in a situation where your budget is not adequate. Unexpected expenses such as a car repair, or a medical bill suddenly occur and you are left struggling to make ends meet just to make it to payday. Payday loans may be tempting if you're in dire straits and have little money to make ends meet. These loans are the perfect solution to this situation, and they are often the most popular.
The truth is, payday loans aren’t as convenient or low-cost as they seem.
What IS a PAYDAY LOAN?
Payday Loans South Africa can provide you with short-term unsecured loans to allow you to access funds quickly when you are struggling to make ends meet. These loans are typically paid back within a week to two weeks. At that point, your account is debited of the repayment amount.
PAYDAY LOCATION FEES
Payday loans come with a small repayment amount that must be repaid within a few days. You can easily fall for the trap of believing that they aren't a high-risk loan. Payday loans can be very expensive because they have higher fees and interest rates than other types of loans. South Africa can charge borrowers up to 5% interest each month. While this may not seem like much, it is. However, borrowers could be charged up to 5% interest per month if they add administration fees. This can lead to a loan of R2000 that costs over R400 in fees as well as interest.
A payday will not solve your cashflow problem due to the high cost of the loan, especially if there are already financial problems. If you take out another loan, your monthly expenses will increase, which could lead to financial stress. You could lose funds you have set aside for another debit order if you have already taken out several debit orders. A bounced order on your credit report would most likely reflect negatively on your credit score. This could make it more difficult to get future loans.
I STILL HAVE MONEY
Personal loans may be cheaper than payday loans if you really need the money. Personal loans are different from payday loans which have fixed interest rates. They can be tailored to suit the risk and needs of each borrower. Personal loans are more affordable for those with a good credit rating. However, it is crucial to determine the total cost of a loan prior to accepting one. It is also important to ensure you only borrow from a lender who will assess you accurately and provide the best loan option for you.
PREVENTION IS MUCH BETTER THAN CURING
Although it is better to avoid needing a loan, it is still better to have enough money. However, this means you need to ensure you have enough money in case of an emergency. It's not an easy task. South Africans do not have any savings. It is essential to set aside an emergency fund in case of a rainy day. You can avoid being in this situation, where you have very little money left at the end the month to pay unexpected expenses.
