Studies show that South Africans are the world’s most avid borrowers.
Over 85 percent of people borrow money each year.
With all that borrowing, it’s important to understand the difference between available loans.
Read below to learn more about the different types of loans.
Payday loans range from R500 to R8,000. There are repayable in one installment on your next pay date. Payday loans are short-term loans traditionally used when you need funds before quickly before your next payday.
Only consumers who are blacklisted or under debt review are not eligible for a payday loan. These can be a great option for how to get a loan with no credit.
Little Loans avoids applying for multiple loans and affecting your credit score. Consumers submit a single application to lenders and choose the best option. These loans have an annual percentage rate of 3 percent per month, or 36 percent APR.
Personal loans are not backed by collateral, also known as unsecured loans. These loans involve a bank, credit union, or an online lender. These loan agreements are usable for any reason.
Receiving a personal loan depends on your credit score, credit report, and debt-to-income ratio.
Interest rates can range from 7 to 36 percent APR. You will have a monthly, fixed payment that lasts for two to five years.
Student loans allow you to continue school without bursaries or scholarships.
The National Student Financial Aid Scheme provide loans to students with financial need. These loans can range from R2,000 to R30,000. Students apply for these through their school’s financial aid office.
Student loans are also available through most major banks. These loans need proof of registration and a parent or guardian to sign surety. You will need to pay the interest on the loan each month. Payment on the remaining balance of the loan begins after graduation.
Home Equity Loans
A home equity loan allows you to borrow against your home’s value. You can receive a home equity loan if your home is worth more than you owe. These loans can are for any reason.
These can be a great option for securing a loan with bad credit. Home equity loans come with large consequences. Borrowers may lose their homes if they fail to keep up with their monthly payments.
Small Business Loans
The Department of Small Business Development offers access to funding or grants. There are certain criteria your business must meet to qualify. This public sector funding takes longer than traditional loans to process.
There are a few different options available, including:
- Small Enterprise Finance Agency – provides loans or grants to help small and medium-sized businesses. Funding can range between R500 and R3 million.
- National Empowerment Fund – offers financial and non-financial help for black-owned businesses. Businesses can receive between R250 and R75 million.
Choosing the Best Types of Loans
Choosing the best types of loans can be an overwhelming process. If you need a quick loan with minimum effect on your credit, contact the experienced team at Little Loans for help.