All You Need To Know About Payday Loans

If you are interested in taking out payday loans, it is essential that you do your research first. Doing proper research requires getting real about your debt and also realising how debt affects the rest of the country.

Too many of us are unaware of the enormity of the decision to take out unsecured credit. This decision is not to be taken lightly, as it has the potential to reduce your family’s quality of life.

Worst of all, we do not realise the very clear and present danger of taking on debt at such an unstable time in South Africa’s economic history. While circumstances grow ever grimmer, having to repay expensive payday loans could very well bring your financial world crumbling down.

Here’s all you need to know about payday loans:

• Although payday loans may seem like the solution, consumers often forget that debt is a cycle. So getting access to money might solve your worries now, but by the end of the month, you’ll have to pay that money back, including interest, causing for you to be low on cash again come the following month.
• If an institution is willing to lend you money with no credit check or documents required in South Africa, that, in itself, should be a red flag. These organisations are known to recklessly lend money to consumers who are not by the means to repay.
• If you are under debt review and need a payday loan, chances are that credit providers will reject your application as your credit profile will be flagged at credit bureaus such as TransUnion, Experian, etc.

If you’re having trouble believing that payday loans are not the best option for you, below are just a few of the economic problems that South Africans are facing right now, either made worse or caused by debts like payday loans.

Hunger

Low-income households are hit the hardest by continually increasing food prices due to inflation and drought. As a result, these households cannot afford to meet the most basic of human needs – food. Before they can even think about feeding their families or themselves, they first have to cover electricity, transport and costly debt repayments, including payday loans.

Violence

Investigations into the horrific Marikana massacres lead to the National Credit Regulator (NCR) discovering 11 unlicensed credit providers. They were granting miners payday loans and attaching garnishee orders to their low salaries when they inevitably defaulted. Experts agree that high levels of indebtedness among miners contributed to this troubling outburst of violence.

Poverty

Wage demands will persist as incomes are insufficient for workers to be able to afford to pay back their payday loans, as well as support themselves and their families. Farmworkers, contract cleaners, and domestic workers earn the lowest wages in our country and live in abject poverty, despite being employed and working tirelessly.

Abuse

The South African credit industry is rife with reckless lenders, predatory lenders, and loan sharks. They don’t do affordability tests (a mandatory part of the loan process stipulated by the NCR) to see if consumers can afford to repay payday loans, without struggling to pay for their basic needs.

Don’t make the mistake of taking out payday loans. Contact National Debt Advisors (NDA) and we’ll help you avoid overindebtedness today.