Short term loans are hard to come by if you have bad credit or are blacklisted. Many financial institutions will most likely turn you down if they find that you have bad credit, or they will charge you an exorbitant interest rate for the short term loan.
Try and minimize your chance of being rejected by making sure that none of these apply to you:
You must not be self-employed as this shows that you are getting an irregular amount of money per month and may struggle with paying the lender back.
You must not be under administration or under debt review. This is self explanatory as if you are still under debt then you may get into more debt through loans.
You may not currently be under sequestration or in the process of being liquidated.
If you are permanently employed, receive your salary into a bank account (monthly or fort-nightly), have been employed for more than three months (this is lender dependent) and are a South African citizen, then your application will be considered with major credit providers.
Blacklisted people often get turned away from major financial institutions that are weary of giving personal loans to people with a bad credit record. This has, of course, an effect on the personal lives of such people.
You can still get a personal loan if you are blacklisted or have a bad credit record. This is because smaller financial credit providers are more inclined to grant you a loan as they are less restricted and have more flexible policies. They are by law required to abide to the National Credit Act, 2005 (Act No. 34 of 2005) so don’t go into a financial credit provider’s office expecting them to break ethos and laws of the country.
Now, here are certain things you need to know in order to have the best chance to acquire that much needed personal loan.
You will certainly attract a higher interest rate because you are still considered a risk. The interest rate is one of the first things you will need to inquire on, so shop around for the best rate.
You have to have been permanently employed with your current employer for a period of more than 2/3 months, receive a salary into a bank account and have a salary slip.
Be a South African citizen.
A lot of these institutions will most likely turn you away if you are:
A commission earner only
Under administration or debt review
Weekly or fortnightly paid
How much can you acquire? Well, it really depends on the lender and you. Some lenders will go as far as R 200, 000 or as low as R 1000, but will depend on how comfortable you are with the interest rate they will charge you. They also will look at your own debt record. The most important thing is to make sure you can pay back these monies.
Be at the ready with documentation such as the last 3 months bank statement, South African ID, payslip and proof of residence. There are still institutions willing to grant loans for blacklisted people and your search should not end with the banks.
If you have a home loan with Standard Bank you may take out what they term the Standard Bank Further Advance, which as they sort to explain as a second bond. Just like other such loans you can use it to consolidate your debts.
Standard Bank Further Advance is a second bond that you register with Standard Bank and use to gain access to a money that you can use to pay off your debts, i.e. to consolidate your debts under one lower interest loan. Although it’s unlikely that Standard Bank will ask you what you will do with the money they might check that you will be using it wisely to avoid them getting into trouble with the NCR.
Some people confuse the Further Advance product with Re-Advance product. With Further Advance you can use the money for anything else you would like, but with the Re-Advance you use it to make alterations and improvements to your current property, but this will require that you give supporting documents like approved building plans and quotations. This is the only difference between these two products so make sure you choose the correct product so as to consolidate your debts with Standard Bank home loan.
If you would like to read more about how best to consolidate your debt please click here.
Not many people can find this information as Absa does not directly or explicitly tell their customers that this is their Debt Consolidation plan/product. Yes, sure, you can use the money you get from this loan to pay off your other debts or make further purchases. If you would like to read up on what and how loan consolidation please read here.
Absa differs from other financial institutions and credit providers in that your home has to actually be worth the entire home loan including the extra loan amount you are requesting. For example, if you have an existing home loan with Absa and it’s worth R 300, 000 and are requesting R 100, 000 then your home will have to be evaluated at worth over R 400, 000. This is according to their conditions for taking out the Absa FurtherAdvance product.
But not to fret, you can actually use these funds as you see fit (which the NCR hopes is spent well).
Old Mutual has a product which helps it’s clients to take out a Debt Consolidation Loan called My Money Plan. The My Money Plan financial product will help you reduce your debt by reducing charges and will also give you regular cash payouts.
A few credit providers and financial institutions offer a debt consolidation loan. These are taken out by individuals who have incurred a individual debts, and a debt consolidation loan aims to help pay the debts off by paying only one major loan.
First let us explain what a debt consolidation loan is. You must remember that this is still a loan that you are taking out, but the advantage with it is that you take out a single loan in which you will now include all your high-interest loans such as credit card and personal loan and hire purchase debts.
Debt consolidation is mostly taken out by taking another home loan that will cover your existing debt. This leaves you with only servicing one loan with a possibility that the interest rate on this will be much lower. Credit providers will also be able to remove your blacklisting or judgement and clearing your credit record.
Another advantage is that if you are in danger of defaulting on your other payments, by taking out a debt consolidation loan you are able to immediately pay them off. To apply click here
You will have to realize that this will work for a few people and not everyone should take out such a loan. For instance if you will not be able to pay off this long term loan.
Finding a loan while you have been listed on creditors bureau’s bad books can be difficult. A person who has a bad credit record will find it difficult to find a loan for the most important things like a car loan and home loan. We will discuss what options people have in getting loans from registered credit providers.
The National Credit Regulator (NCR) was formed to fulfill the requirements of the National Credit Act 34 of 2005. The act aims to:
provide for the general regulation of consumer credit and improved standards of consumer information
prohibit certain unfair credit and credit-marketing practices
promote responsible credit granting and use and for that purpose to prohibit reckless credit granting
provide for debt re-organisation in cases of over-indebtedness
regulate credit information, among other details which you can read here
Although you may be blacklisted the act helps credit providers from putting people into even more debt without exercising the debt they are currently servicing. Be that as it may, you may still go and seek a loan from registered credit providers who will need to also work carefully not to put you in even more debt, or debt that you can’t service.
So, what ways can you get a loan even though you are blacklisted?
You may look for credit providers who will review your credit score and establish if even though you have a bad credit record they may be able to lend you money. Be careful that they are registered by searching for them on NCR database. Being a blacklisted individual may also attract a higher interest rate as you are still a risk.
You may apply to consolidate three or four major debts and reduce these by hundred or thousands or Rands a month. This is because a debt consolidation loan takes one major loan for all your major debts such as personal loan and credit card loans. You now will have only one loan with a stable interest rate. You may be asked for collateral such as your home, but this will depend on your debt and credit provider.