When it comes to short-term loans, not all banks and micro lenders are equal and it will stand you in good stead to read the fine print before making a decision to go with one or the other. That is if a short-term loan is the only way out for you because you don’t have the luxury of other options to consider.
A word of caution: Always discuss your financial needs – including the need for a short term loan – with a professional and independent financial advisor or planner. They are well versed in all financial products and services and can advise you on the upside and downside of short term loans and providers, especially in the case of such loans being unsecured.
Short term loans are offered by banks (mostly secured loans) as well as other institutions that specialise in cash loans, often called micro lenders. Another kind of short term loan is called ‘payday loans’, taking the form of a credit advance on your salary when payday is too far off and you need money now. Cash loans and ‘payday loans’ can also be unsecured loans, that is when no documentation is required to be provided by the borrower in case of the best laid plans of mice and men going awry, leading to you defaulting on your monthly repayments.
A quick search for instant loans available in Pretoria delivered the contact details and introductory information about a vast number of short term loan providers, almost as many as the proverbial hairs on a dog’s back, vying for needy customers’ attention (and hard-earned cash).
With so many suppliers and providers of short-term loans across a very wide spectrum, a needy customer can easily vote with his or her feet when one supplier or provider doesn’t or can’t fulfil his or her needs and choose another. To make sure that you are not locked in once you’ve applied at a provider, always study the fine print and Terms and Conditions of each provider’s products and services before choosing a provider and applying for a loan with them.
When it comes to charges, few companies that have their contact details and information on the Internet openly disclose the interest rates and other charges pertaining to the short-term loans they offer. This is most likely dealt with individually with interested applicants. Some are upfront about charging no hidden costs and no extra charges for early settlement. Some of the providers are upfront about the fact that you should not apply if you cannot take on debt. Not declaring this might force them to take the necessary legal steps to recover the amount borrowed.
When looking at a provider’s introductory information, variety is the name of the game and while some put their credentials and experience first, others use testimonials from satisfied customers to attract attention. Don’t let this or the sometimes unexpected names of the companies mislead you – the most self-explanatory name doesn’t mean that the provider is accredited, responsible, reliable and therefore the best one to go with. When looking for reliability, a good track record and a number of years’ experience in the industry are criteria to look for.
You can apply for a loan at any of the many providers listed in several ways. A good way to start is by doing a search on the companies and then to do some research and zoom in on those providers that offer the type of loan or loans that you want. Some of the bigger providers (even banks) engage in cold calling and direct marketing (in the form of marketing material in mailboxes) to ensure that they are top of mind when you are looking for a loan. Some providers will accept an online, which can be sent at the time of you discovering their products and services.
A registered credit provider might want to do some credit checks (sometimes using their own scoring criteria and assessment tools) as part of your application - you will have to consent to such a check. With cold calling, providers often catch customers by surprise. Not being able to focus on the call as they might be preoccupied, such customers often agree to take out a loan without paying careful thought to it at the time.
Many providers nowadays steer clear of cold calling and direct marketing, relying instead on the customer to make contact first by a sending an e-mail indicating their interest in obtaining more information about a short-term loan. When they’ve received your e-mail, they will send you an application form to complete. It is important to fill in all the required fields on the form and to attach all the relevant documents that they request.
If you have a bad credit record and borrowing money is inevitable, the best provider of such loans is always one that is an accredited financial services and credit provider, accredited as such with and operating under a license provided by the Financial Services Board (FSB). This will provide you with much needed peace of mind that the supplier has to comply with certain criteria, but also that you have some recourse in the case of you being in any way dissatisfied with any aspect of the service offered to you.
By now, the potential harm of unsecured loans to the economy is by now well documented following the African Bank saga earlier this year. As a result, unsecured lending – no matter how well and attractively packaged – should be approached with extreme caution and only after extensive research and objective advice from an independent financial advisor have pointed to this as the only solution.