If someone promises you a loan without checking whether you can afford it, be careful
When you need money urgently and your credit score isn’t good, no credit check loans can sound like the answer.
No questions? No long application? Easy money in your account? The truth is getting credit in South Africa doesn’t work like this.
Under the National Credit Act, a credit provider must take steps to check if you can afford new credit before giving it to you.
The process is there to help stop people being given debt they can’t afford to pay back.
So, searching for ‘no credit check loans in South Africa’, ‘loans for bad credit’ or ‘bad credit loans’ online doesn’t necessarily lead you to a safe loan.
When you apply for credit, a registered credit provider needs information about your finances. This can include your income, living costs, current debts and how you have managed debt in the past.
A credit provider may also use information from your credit record to see your debt and repayment history.
Be careful of guaranteed and instant loan promises
Words like ‘guaranteed approval’ can sound very tempting when you’re short of money.
But wait.
Slow down before giving anyone your details or paying anything. Check that the credit provider is registered with the National Credit Regulator (NCR).
And never pay an upfront fee to get a loan.
The NCR has warned consumers about scammers who pretend to be registered lenders, approve a fake loan and then ask for money before releasing it.
Know what you’re agreeing to repay
Before considering offers like an ‘instant payday loan’, look beyond the amount of money you’re being offered.
Check:
- How much will you repay every month?
- What interest and fees will you pay?
- How long will you be paying?
- What will the loan cost you altogether?
Never forget: Fast money still has to be paid back and if the repayment doesn’t fit into your monthly budget now, getting the money quickly won’t change that.
A safe first step is to get your credit record before looking for another loan.
If you’re worried that bad credit is stopping you from getting a loan, first find out what lenders may be seeing.
Check your credit report for missed payments, outstanding debts or information that may be wrong.
You may find something you need to fix. Or you may realise that taking on another repayment isn’t the right move yet.
Don’t shy away from the checks if you’ve got bad credit
Maybe you’ve missed too many payments or your credit score is lower than you’d like it to be. But poor credit doesn’t change the important question in this conversation:
“Can you afford another repayment every month?”
If your answer is no, another loan could make your money problems worse.
Always know your credit position before you borrow
Before looking for another loan, get a clear picture of where your credit stands.
Finance365 gives you access to your latest credit score and credit report so you can see what’s recorded against your name and make a better-informed decision about asking for more debt.
