If you are looking for a quick cash injection, whether it be to ease the payment load of a heavy month, or to purchase something for the household, you could look at applying for a cash loan. However, you need to consider whether a bad credit rating could stop you.
Applying for a cash loan can be done through a registered credit provider such as a bank. This would normally be termed as a “personal loan”, and would come in the form of an Internet transfer into your bank account, once approved for the loan. While these loans come with the guarantee of being provided through a reputable institution, the downside is that stringent credit checks are run on your consumer and credit history before you can be considered. Therefore, if you have been blacklisted or have a bad credit history, this type of loan may be very difficult to secure.
The benefit to securing a bank approved personal loan, however, is that you have peace of mind that your loan repayment terms are strictly governed by the rules and regulations set out to the registered banks by the South African Reserve Bank.
The common route for those with a bad credit record looking to apply for a cash loan is to approach the less “regulated” lenders. There are a frightening amount of companies and loan providers online offering cash loans to people with bad credit histories.
These companies will offer you one of the following:
- They could act as an intermediary to a bigger, more established financial institution – here if you can prove that you are seeking out a loan to get your current debt under control, you may be granted a cash loan even after a credit check has been performed. However, be advised that interest rates in this situation are likely to be highly inflated. While you have proved that you are trying to get out of debt, you are still a credit risk, and thus interest rates will be higher for you.
- They could also provide an unsecured loan, essentially meaning that they would provide you with a loan without knowing your credit history. These options are a dime-a-dozen on the Internet, and all attract fairly high interest rates. Be careful when applying for this type of loan, as scams are prevalent here due to the often unsuspecting nature of the applicant, as well as the lack of face-to-face interaction of the online application process.
The bottom line is that a cash loan can be an effective way to manage some debt or to finance that little ‘something extra’. However, if the debt incurred in securing this loan is not paid back as planned, you risk getting into further debt, which can lead to a dangerous cycle of debt, borrowing and further debt.
Incurring debt is a near-necessity in our economic climate, and we all encounter periods when we require a little extra cash. It is how we manage this debt that makes all the difference.
Peter Setou of the National Credit Regulator, says –
“Consumers should be pro-active about their debts and should take action before receiving a letter of demand or a threatening phone call” (www.property24.co.za).
Having a bad credit record is certainly not ideal, but the good news is that this should not stop you from applying for and securing a cash loan.