No matter how good your budget planning is, you may still end up with unexpected expenses which have to be paid on an urgent basis.
In this situation, you can use one of the many emergency cash loans available in South Africa. This is a highly effective solution, especially if you do not have an emergency cash fund with several hundred or several thousand rand.
Find out how to get the money which you need when you are in a difficult situation.
Quick Cash Bank Loans
When you need to borrow money, the well-established commercial banks should be your primary choice of lenders. There are smaller credit providers that offer more easily accessible and faster loans, but these benefits come at a price. You may have to pay a higher interest rate and/or follow a more financially burdening repayment schedule.
There are several types of emergency cash loans available from banks in South Africa:
Credit cards – If you have a card at hand, you can use it directly to withdraw cash from any ATM.
Home equity loans and lines of credit – These are easy to get when you have sufficient equity in your home. You can expect to pay a lower interest rate since the credit is secured with your house. Just make sure that you take into account the risk associated with placing your home as collateral.
Unsecured loans – These are among the most popular personal loans. You do not have to place an asset as collateral. The lender will just check your income to ensure that you earn enough to repay the loan. Since there is no collateral, the risk of the lender is higher. That is why the interest rates are higher as well. At the same time, you will not have to risk any of your assets.
Consider going for an unsecured loan in case of an emergency
It may be more expensive, but you will not put a valuable asset on the line. That way, you will get some level of protection if the emergency situation gets worse. It pays off to look for a lender that is known for paying personal attention to customers in addition to looking at the numbers from the credit report and pay slips.
Emergency Cash Loans from Friends
If you are in a difficult financial situation, your family and friends may be able to help you get out of it. It makes sense to turn to a person who is close to you in case of cash emergency. If a friend or family member offers to help, you should prepare a loan agreement and have it signed.
If you cannot find a loan, however, you should not be offended as the people around you may also find it difficult to mange their budget or worry about financial trouble hitting them as well. You can consider peer to peer lending as an alternative. With a P2P loan, you will borrow money from a private person like you under terms and conditions which may be favourable to you.
Fast Payday Loans
If you have exhausted all other emergency cash loan options, you can consider payday loans in South Africa. They are dangerous, but if you do not have sufficiently good credit score and/or sufficiently high income, you will most certainly not be able to get finance in another way. If you decide to use such a loan, you should be fully prepared to repay it on your next pay day.
Extending it or using another loan during the next month can get you into serious debt.
The issue with payday loans is that if they are not used as a one-off solution carefully, they can make things worse. They have a very high APR due to the high interest rates and the considerable fees charged by micro lenders. Besides, interest is charged daily rather than monthly or annually. These factors make them quite expensive.
If you do not have sufficient income to repay what you owe and you cannot qualify for a traditional loan, you can end up in great trouble.
Title loans are considered to be just as risky.
You have to place an asset, typically your car, as collateral. The lender will grant the loan fairly easily, but you can expect considerable monthly payments. If you cannot make the payments, you may lose your asset. If you lose your car, you may not be able to go to work and earn income.
There are alternatives to emergency cash loans which you should consider.
The best solution is to have an emergency fund, but if you do not, there are other options to try. You can consider selling an asset of yours. This can be a flat-screen TV, a luxury piece of furniture or even your car. You will be able to use the proceeds of the sale straight away.
You will not have your asset around, but at least you will not be burdened with paying interest and fees in the coming months and years.
Besides, the cost of using a loan may exceed considerably the value of the asset that you sell. This is especially the case with payday loans.
Choose carefully between the different emergency cash loans in South Africa.