Getting finance while blacklisted in South Africa
Find out about bad credit loans in South Africa and make getting finance while blacklisted a breeze. We'll let you know what your options are and how to get approved for a loan to start rebuilding your credit score.
There are credit products which are specifically designed for South Africans with a poor credit history, but they tend to be more expensive than traditional personal loans. Even if you are blacklisted you can still get finance, as long as you are able to prove that you can afford the repayments or, alternatively, that you are able to put up some form of collateral.
Find out how to improve your chances of getting a loan by reading through our expert advice and tips on finance, credit and debt.
Bad Credit Loans in South Africa
Understanding your Bad Credit History
When it comes to a bad credit history, you have to know exactly where you stand and exactly what items have been recorded against you. The best way to do this is to request your credit report and go over it carefully. All South Africans are entitled to obtain one free credit report per year and you should make use of this tool to find out exactly what the credit bureaus have against you. If you notice any errors, you should address these immediately. It is not uncommon for people to find that there are fraudulent items on their credit report.
You should know that having bad credit does not mean that you cannot qualify for a personal loan. You may not be able to meet the requirements of traditional banking institutions, but you may qualify for products offered by other bad credit lenders. That is why you should always explore all available options.
You just need to do this carefully. It is best if you submit loan applications to different lenders within a short period of time such as a week or two. In this way, the applications will not have a negative impact on your credit record. You must apply only to registered credit providers that adhere to the rules and regulations of the National Credit Act.
Remember that loan sharks will readily offer you a personal loan for bad credit to you, but they will charge interest and fees which may be virtually impossible to pay.
When your credit record is poor, you should consider alternative ways for obtaining finance such as bad credit and blacklisted lenders.
Government support for people with bad credit
There are special credit programmes run or supported by government agencies and local authorities. These are designed to help people who are in difficult situation to get micro finance for covering cash emergencies, for making repairs or improvements to their homes or for starting a small business for supporting themselves. You should research such programmes and apply online or in person.
Keep in mind that sometimes the these short-term loans are offered through traditional lenders such as banks.
Peer-to-peer Loans for Blacklisted
Peer to peer lending is gaining momentum and becoming more and more popular among South Africans. You can readily obtain a loan from a private person via a P2P platform directly without the need for a bank or other credit provider. You do not have to meet any specific financial criteria in order to get finance as different lenders specialise in different types of credit.
However, you must still make a commitment to repay the principal plus the cost of borrowing on time and in full to prevent any further damage to your credit.
Alternative ways to get a loan if you have bad credit
You will certainly feel more comfortable to get a loan from a family member or a friend. You will most likely have higher chances of getting finance as well especially if you are blacklisted. If you go for this option, you must do your best to get all the details written up in a formal contract to avoid any disputes and problems later and preferably have the funds transferred to your bank account instead of getting cash.
If you need a small payday loan or just a small amount of money to tide you over until payday, friends and family will be your cheapest and safest option.
Even if your family and friends are not able to lend money directly to you, they may still be able to help you out. If they have stable and secure employment income, they can be your co-signers. When you have a co-signer, you two take out the loan jointly and you share the responsibility for its repayment.
In this way, the risk for the lender is lower and you can get a pretty good deal.
Secured Loans for People with Bad Credit
If you have bad credit or are blacklisted in South Africa, you will have higher chances of securing a loan if you place collateral up to secure your loan.
The collateral is a valuable asset which serves as security. If you do not repay the loan, the lender will have the right to repossess the asset. Given this, the risk of you defaulting on the loan will be lower. As a result, the lender will be more willing to grant you a loan. You will most certainly secure a lower interest rate as well. This is a helpful solution, but you must ensure that you will be able to repay the loan. You should not underestimate the risk which you will assume when taking out further credit.
You have to know exactly how much the loan will cost you and what installment amounts you will have to pay. If the loan seems quite hard to repay given your current income and monthly expenses, you should look for an alternative solution. You should avoid getting into further debt to repay existing debt unless you are consolidating your debt or are undergoing debt management or debt counselling with the assistance of a professional.