Payday loans or cash advance loans are a type of short term loan in South Africa. These are small cash loans that need to be paid back on your next pay day. Payday lenders offer these loans to people who need cash fast and who may not qualify for a personal loan or credit card. The application process for a payday loan is quick and easy and can be done online or in-store. But remember payday loans come with a higher interest rate and fees so it’s more expensive than other forms of credit.
Features
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Cash Advance APR. Cash advance APR is higher than regular purchase APR.
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Money Paid. Amount you can borrow with a cash advance or personal loan is subject to lender approval and your income and credit history.
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Short-Term Loan. Cash advances are meant to be paid back in a short period of time, on your next pay day.
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Bank Account. Bank account is required to apply for a personal loan or to receive a merchant cash advance.
Pros and Cons
Pros
Convenience. Cash advances, whether through a credit card cash advance or a payday loan, provide fast access to cash when you need it.
No Collateral Required. Unlike other forms of borrowing, cash advances do not require collateral, making them accessible to more people.
Easy Application Process. The application process for cash advances is typically straightforward and can be completed quickly, either online or in-store.
Cons
High Interest Rates. Cash advances often come with high interest rates, making them an expensive form of borrowing.
Additional Fees. In addition to interest charges, cash advances may also come with additional fees, such as late fees or transaction fees.
Risk of Debt. The ease of accessing cash through cash advances can make it tempting to borrow more money than you can afford to pay back, leading to a cycle of debt.
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How to Apply for a Cash Advance Loan?
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Research Lenders. Look for reputable lenders that offer cash advance loans in South Africa. Compare interest rates, fees, and repayment terms to find the best option for you.
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Check Eligibility Criteria. Make sure you meet the lender's eligibility criteria, such as having a regular income, a bank account, and being at least 18 years old.
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Gather Required Documents. You will typically need to provide proof of income, a valid ID, and bank statements when applying for a cash advance loan.
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Submit Your Application. Complete the application process, either online or in-store. Be prepared to provide personal and financial information.
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Wait for Approval. The lender will review your application and make a decision. If approved, you will typically receive the cash advance loan amount in your bank account within a few business days.
Requirements and Conditions
Requirements
Age. Borrowers must be at least 18 years old.
Nationality. Borrowers must be residents of South Africa.
Affordability. Lenders will conduct an affordability assessment to ensure that borrowers can afford the loan repayments.
Income. Borrowers must have a stable monthly or weekly income or other sources of income.
Credit Rating. Having a good credit history can increase the chances of approval and secure a lower interest rate.
Bank Account. Borrowers must have a valid South African bank account.
Conditions
Amounts. Cash advances are generally for smaller amounts, up to R8,000.
Terms. The repayment terms for cash advances are generally shorter, up to 6 months.
Interest Rates. Short-term cash loans from a registered lender have a maximum interest rate of 5%.
Ways to Receive the Money
Once your loan application is approved, the loan provider will transfer the borrowed amount to the bank account you provided during the loan process. The transfer usually happens on the same day, but it may take some time for the funds to reflect in your account, depending on your bank's processing time. If there is a delay in approving the DebiCheck mandate request from your bank, it could potentially postpone the transfer of funds into your account. It's important to ensure that your bank account details are accurate and up to date to avoid any delays in receiving the borrowed amount.
Things to Pay Attention To
Interest Rates and Fees. Cash advances, including credit card cash advances, personal loans, and merchant cash advances, can come with high interest rates and fees. It's important to carefully review the terms and conditions of any loan offer before accepting it.
Credit Limit. The amount of money you can borrow with a cash advance is typically limited to a certain percentage of your credit limit. It's important to understand your credit limit and how much you can afford to borrow before taking out a cash advance.
Repayment Terms. The repayment terms for cash advances are typically shorter than for other types of loans. It's important to understand the repayment schedule and make sure you can afford the monthly payments.
Eligibility Requirements. Lenders may have different eligibility requirements for cash advances, including credit score, income, and employment status. It's important to review the lender's requirements before applying for a cash advance.
Alternatives. Cash advances can be an expensive way to borrow money. It's important to consider alternatives, such as personal loans or credit counseling, before taking out a cash advance. Additionally, it's important to only borrow what you need and can afford to repay to avoid getting into debt.
Reasons for Getting Rejected for a Cash Advance Loan
Poor Credit History. Lenders may reject a cash advance loan application if the borrower has a poor credit history or a low credit score.
Insufficient Income. Lenders may require borrowers to have a minimum monthly income to qualify for a cash advance loan. If the borrower's income is insufficient, the application may be rejected.
High Debt-to-Income Ratio. Lenders may reject a cash advance loan application if the borrower's debt-to-income ratio is too high. This means that the borrower's monthly debt payments are too high compared to their monthly income.
Incomplete or Inaccurate Application. Lenders may reject a cash advance loan application if it is incomplete or contains inaccurate information. It's important to carefully review the application and provide all required information.
Overborrowing. Lenders may reject a cash advance loan application if the borrower has already borrowed too much money or has a history of overborrowing.
How to Repay a Cash Advance Loan?
Understand the Repayment Terms. It's important to carefully review and understand the repayment terms of the cash advance loan before accepting it. This includes the repayment schedule, the amount of each payment, and any fees or penalties for late or missed payments.
Make a Budget. Create a budget to help you manage your income and expenses and ensure that you can afford to make the loan payments on time. This can help you avoid falling into debt or missing payments.
Prioritize the Loan Payments. Make sure to prioritize the cash advance loan payments over other expenses, such as discretionary purchases or non-essential bills. This can help you avoid falling behind on payments and incurring additional fees or penalties.
Set up Automatic Payments. If possible, set up automatic payments for the cash advance loan. This can help ensure that you never miss a payment and can help you avoid late fees or penalties.
Communicate with the Lender. If you are having trouble making the loan payments, communicate with the lender as soon as possible. They may be able to offer you a modified repayment plan or other options to help you manage the debt. It's important to be proactive and honest about your financial situation to avoid falling further into debt.
