The convenience which payday loans in South Africa give you is amazing. You can get sufficient amount of money to cover emergency expenses and to manage your budget for the month. You repay the loan quickly and forget about it. However, not all credit products of this type are created equal.
Quality Payday Loans & Stay Protected from Loan Sharks
There are many legitimate lenders that offer payday loans, but there are also loan sharks that try to squeeze as much money out of borrowers as possibly by setting shockingly high interest rates and fees. These illegal lenders typically target vulnerable consumers like low-income individuals and blacklisted people. It is important for you to know how to tell the high-quality legal products from those offered by loan sharks.
Interest - The interest rate charged by legitimate lenders never exceeds the limit on payday loans also known as microloans. This limit is set by the National Credit Regulator of South Africa. You can readily check it. The interest charged by loan sharks is much higher. In some cases, it is 3 times higher than the set legal limit.
It is important to note, however, that even legitimate lenders charge the interest per day for these loans rather than monthly. This is because their term is typically shorter than or around a month.
Fees - Legitimate lenders disclose a list of fees which they charge. You will have to pay a loan initiation fee and a service fee plus a penalty fee for late and missed payments. If you request optional services, you will get charged for them as well. The lender discloses how the fees are calculated and produces precise numbers.
Loan sharks, on the other hand, charge super high fees without explaining where they come from. In fact, you may not get an idea about the actual size of the fee until the lender asks you to pay them. Over time, they may charge extra fees which add greatly to the cost of the loan.
Now you can easily recognize the legitimate payday loans from the ones offered by loan sharks.