Payday loans are short-term, unsecured loans that allow you to quickly access money when you have an emergency. These loans are typically repaid within a few weeks. After that, the repayment amount is taken from your account.
THE COST OF A PAYDAY LOCAN
Payday loans are a short-term loan that is repaid quickly. This can make it easy to believe that they don’t pose a high risk. These loans come with higher interest rates and fees than any other loan type, which makes them very costly. South Africa’s borrowers may be charged interest rates of up to 5% per month. This might not seem like much. Add in administration fees and you can end up paying more than R400 in interest and fees on a R2000 loan.
These loans have higher interest rates and fees than any other loan type.
A payday will not solve your cashflow problems due to the high cost. This is especially true if you are already in financial trouble. You will be putting yourself in a worse financial position by taking out another loan. Your expenses will only go up, putting you at risk for more financial stress. If you have had multiple debit orders prior to taking out your payday loan the repayments could drain your account funds, which you may have saved for another debit order. A bounced debit order will almost certainly mark your credit history and make future loans more expensive.
I NEED MORE MONEY
A personal loan might be cheaper than a payday loan if you really need the money. Personal loans can be tailored to meet the individual needs of borrowers, unlike payday loans which have fixed interest rates. A personal loan is more affordable if your credit score is above or below average. It is important to calculate the cost of the loan before you accept it. You should also be sure to only borrow money from responsible lenders who will accurately score you and offer the best loan possible for your circumstances.
PREVENTION IS MORE EFFECTIVE THAN CURE
It’s better not to need a short-term loan . This means that you must ensure that you have enough cash even when faced with emergency expenses. This is not an easy task. South Africans don’t have much savings. However, it is important to save money for the inevitable rainy day. This will prevent you from falling into a situation where you don’t have enough money at the end to cover unexpected expenses.