Loan options for people with bad credit
As a result of insufficient income and overwhelming debts you could easily find yourself blacklisted and unable to access any form of credit. This leaves people and families devastated and burdened by their inability to improve their financial situations and do the things that matter the most to them.
Bad credit: Understanding your credit score & risk profile
All South African consumers have a credit profile that is essentially a history or report of all their financial commitments and repayment or non-payment. If you take out a personal loan this will be recorded on your profile along with information as to whether or not you've made the agreed repayments.
If not, this non-payment will be recorded on your credit profile and will lower your credit score. On the other hand, honoring your repayments will have a positive effect on your credit profile.
Having bad credit or being blacklisted simply means that you have not honored your credit agreements and have been flagged as a high risk borrower. This also means that mainstream lenders and banks will be unwilling to provide you with a loan - be that a home loan, car finance or even a small personal loan.
How to get a loan with bad credit?
Bad credit loans are also sometimes referred to as blacklisted loans and simply refer to a personal cash loan that is offered to an individual that has a bad credit history.
One way to get a loan from a bank when you are blacklisted is to offer up security in the form of your home or equity in your home. This is risky for you as the borrower since if you do not keep up with the repayment you may be facing repossession.
On the other hand, offering security allows you to secure a personal loan with bad credit and a lower interest rate to boot. Another form of security is that of your vehicle, provided that you own it outright, you could use it to secure a loan quickly and easily.
Finally, if you're looking for a small, unsecured short-term loan you could opt to make use of a bad credit lender who deals specifically with people who are blacklisted or have poor credit. This, although one of the only options for those with a tainted credit history may be significantly more expensive than a secured loan and will only offer you a small sum of money.
Secured loans for bad credit are ideal for people who:
- Own their homes or vehicles
- Have been refused unsecured credit by their bank
- Are blacklisted and cannot pass an ITC check
- Need a larger amount of credit than is offered by an unsecured loan
- Have sufficient monthly income to repay a loan
- Want a consolidation loan and have sufficient income to repay the new loan.
Unsecured loans for bad credit are ideal for people who:
- Are blacklisted or have bad credit
- Do not own their own homes or vehicles
- Do not want to offer up security in exchange for a loan
- Need a small amount of money
- Have been refused a loan by a bank
- Have sufficent income to make payments on a new loan
What do I need to qualify for a bad credit loan?
In order to qualify for a loan with bad credit, you must;
- be a South African Citizen with a green bar-coded ID or a smart ID card,
- be over the age of 18 (some lenders require applicants to be over 21), and
- have a monthly income that exceeds R3,000.00.
Applicants who do not meet the above mentioned criteria, have declared bankruptcy, or are under debt review will not be granted a loan.
You will likely also have to provide;
- a certified copy of your ID,
- a recent payslip, and
- valid proof of address.
If you are opting for a secured loan you will have to provide details on the security as well as relevant supporting documents.
Who gives loans to people that are blacklisted?
In South Africa there are only a few registered credit providers that specialize in bad credit loans and these are conveniently listed below to make your process of finding a suitable lender easier. In the meantime, it's important for you to know what to look for when comparing these lenders and how to avoid getting yourself into financial trouble.
One of the first things that you need to look at when evaluating possible lenders is that they are registered with the National Credit Regulator. This ensures that they are compliant with the laws regulating credit providers and that they satisfy the government's requirements to trade.
How do I compare loans for bad credit?
Once you've ensured that the credit provider is registered with the NCR, you can start looking at the interest rates offered and the features of their loans. You can begin by comparing the offers made by the various lenders, including, how much they will lend, what their interest rates look like and if they charge additional fees.
Our website makes this easy by providing you with a summary of all the most important loan features and details of each provider in a clear and simple manner. You can start by looking for lenders who are offering the loan amount that you are looking for and then eliminating them based on their Annual Interest Rate (APR).
How to apply for a bad credit loan online?
The majority of bad credit lenders and, particularly those listed on this website offer online loan applications. This means you're free to apply for a loan from the comfort of your own home and do away with face-to-face meetings and long queues.
The first step would be to fill in an application form; this form will request your personal information, contact details and employment history as well as how much you want to borrow, for what purpose and for how long. Once you're done with the form you will either be asked to upload your supporting documentation or, you will receive an email with further instructions.