Getting personal loans for people with poor credit in South Africa sounds difficult, but it’s definitely not impossible. Usually, banks close their doors on persons with poor credit because of the risks involved. However, there are some financial institutions that are still willing to be lenders for people who have a bad credit score. The challenge though would be on finding these eager lenders.
How to Find a Suitable Lender
People with poor credit that looks for a potential lender may do the following:
- Check on the Internet or newspapers for advertisements from willing financial service providers. Institutions that offer loans for people with poor credit also sometimes post in local bulletin boards.
- Word of mouth can be very useful in helping one find a lender. Referrals and advice from friends and family members are also beneficial.
When all else fails, a borrower can always turn to the services of loan hunters or seekers. Fortunately, these loan seekers have a network of connections in the financial industry and they are much more experienced in the field of lending. Thus, they can really help a person with poor credit find the most suitable lender for his/her situation.
The Benefits of a Poor Credit Loan
A person with a low credit score that wish to re-establish their financial credibility, a personal loan can be of great help. There are several types of loans such as payday loans, medium loans and long term loans. The type of loan that a person may get depends on his/her credit history.
Long term loans are not really very helpful for people with a poor credit record due to their situation, but short-term loans are. Short term loans have a payback period of 3 to 6 months and is generally more manageable. Considering this advantage, a person with a low credit score may apply for a short-term loan and pay it regularly thus increasing his or her credit score and gaining the confidence of the financial institution that he/she definitely pays back the money owed.
In addition, loans for people with poor credit don’t have ridiculous interest rates as the National Credit Regulatory Board (NCR) governs these type of loans. Therefore, financial institutions could not place any interest rate as they wish. Plus, these financial institutions will not force a borrower to over-commit as it is against the law.
The Downside of a Poor Credit Loan
On the contrary, personal loans for people with poor credit may have even stricter requirements as the lenders would also want to protect themselves. Every financial service provider has a set of minimum criteria that such a person should meet. Otherwise, the loan will not be approved.
For instance, these providers require that the loan applicant should be permanently employed. Usually banks and loan institutions exclude people that is sequestrated or under debt counselling.
One thing is quite clear when it comes to personal loans for people with poor credit in South Africa – it is completely possible to get one. A borrower has to remember that having a low credit score is not the end of everything. There is financial institutions that still provides hope. Every financial problem has a solution.