Are you looking for a payday loan but struggling because of your credit score? Many people in South Africa face the same struggle of getting rejected due to bad or no credit history. We will tell you about payday loans with a bad credit history and how they work.
These are the unsecured loans provided by online lenders that focus on your current affordability instead of your credit history; they utilize alternative methods instead of a traditional credit check. To understand the alternative methods, let’s first learn what exactly a credit check is.
What is a credit check?
A credit check is the process of evaluating your credit reports to verify your reliability and creditworthiness, which is utilized by banks, landlords, and some employers. Most commonly, it is used by money lenders and banks to gauge the risk of issuing credit to you. Credit checks are done in two different ways: a soft credit check and a hard credit check.
Credit check includes the evaluation of factors like income, DTI, Credit score, assets, and job type. A credit check becomes a major deciding factor whenever you are applying for a loan.
What are payday loans without a credit check in South Africa?
Payday loans without a credit check are short-term, unsecured loans repaid within a month, aligning with the borrower’s paycheck, that are obtained from online lenders without a verified credit score because most traditional banks don’t provide loans without a credit check.
No credit check loans are possible in South Africa because the National Credit Act (NCA) only mandates performing an affordability assessment test, which can be done using different methods, as it doesn’t mandate a credit score check.
Difference between soft and hard credit checks
| Hard Credit Check | Soft Credit Check |
|---|---|
| It temporarily lowers your credit score. | It doesn’t affect your credit score. |
| Permission is required to initiate a hard check. | Can be done without your permission |
| Also shows on your credit report for 2 years, and can be seen by other lenders. | Shows on your credit report for 2 years, but can only be seen by you. |
| It is mostly done when you apply for a loan. | It can be done for various reasons, ranging from a background check to a credit eligibility check. |
Can I get a payday loan with a low credit score?
Yes, you can get a payday loan with a low credit score in South Africa, because some online lenders that don’t check your credit score and use alternative criteria to verify your affordability, such as checking your income and bank statements. However, these instant loans may have high interest rates and fees to minimize the lender’s risks.
How do I check if I’m eligible for small online loans with no credit check?
You can’t get a payday loan with no credit check from a traditional bank, but many lenders use alternative methods for affordability assessment, as it is mandated by the National Credit Act. You can check these criteria to verify your eligibility:
- You should be a citizen of South Africa and have a valid ID card to prove that.
- A proof to show that you have a stable source of income.
- You should not be bankrupt.
- Be over 18 years old.
These are some common criteria for eligibility; online payday lenders may also have their own criteria for affordability assessments.
How can I apply quick online payday loans?
Step 1. Find a trusted lender:
The first step includes finding a reputable and trusted lender that provides a payday loan. You can do this online through dedicated loan searching websites like Moneystar, and then compare them for a better decision.
Step 2. Apply online:
Fill out our loan application using your personal details and provide the required documents. After that, wait for their approval.
Step 3. Collecting and repaying.
After approval, you can get the money in just a few minutes. After getting the funds, repay them within the mentioned time period to protect your credit score and avoid late fees.
What alternatives to urgent payday loans without credit checks are available online in South Africa?
Payday loans without credit checks are never advisable because of their high interest rate and fees, which increase the risks of getting stuck in a cycle of debt. Always consider alternatives like these before getting a payday loan.
Salary Advance:
If you are employed and have an urgent expense before your paycheck, you can talk to your boss/employer. They may provide you with an advance from your upcoming paycheck; these advances are also interest-free and don’t require a credit check.
Secured personal loans:
If you have a valuable asset (like jewellery or a car), you can get a secured loan, which has significantly lower interest rates compared to payday loans. These loans are also available for low credit scores, but it is still important to repay them on time, as you risk losing your valuable asset.
Borrowing from family or friends:
When you are struggling financially, it is better to ask for help from your family and friends first before getting a payday loan. This way, you may be able to get an interest-free loan with highly flexible terms; however, it’s necessary to make a loan agreement to tackle any misunderstandings in the future.
Social Grants:
These are the financial aids provided by the South African government to the financially struggling group of the population. Check your eligibility for social grants by going to SASSA. Claim the benefits if available, as it will significantly reduce the financial stress.
When payday loans for no credit check right for you?
Payday loans are not advisable in most cases because of their high interest rates and short repayment terms, meaning they can easily trap borrowers in a cycle of debt. They are only helpful in some specific scenarios like these:
For True Financial Emergencies: If you desperately need some cash, and it’s for something really important like a medical bill, car repair, or you’ve got your landlord breathing down your neck, and you have no other way to borrow up the cash, a payday loan can probably solve your problem pretty quickly.
For bad or no credit history: If your credit score is a disaster or you have never actually gotten credit before, then banks & other traditional lenders will not give you any credit. No-credit-check payday loans are designed for individuals who can’t obtain a loan elsewhere.
No other Options are Available: These loans should only be taken when you don’t have any other alternative options, such as a credit card, borrowing from family, or a personal loan.
Apply Now
Payday Loans Without Credit Checks South Africa- Some FAQ’s.
What is good about payday loans?
The good thing about a payday loan is that it offers fast and accessible credit to a wide range of people because the requirements for these cash advances are significantly lower than traditional loans.
What factor has the biggest impact on my credit score?
Your payment history has the biggest impact on your credit score; late or missed repayments can significantly reduce your credit score.
What documents are required for a payday loan without a credit check?
A South African ID card, a Bank statement for the minimum 3 months, and proof of residence are required for a payday loan. Many lenders can also ask for specific documents according to their criteria, like an electricity bill.
How much can I borrow urgently with a payday loan in South Africa?
In South Africa, you can borrow up to R5,000 with a payday loan, but the exact urgent amount will heavily depend on your financial profile, like income, credit score, and job type.
How quickly can I receive funds with a payday loan with bad credit?
You can receive funds in just 15 minutes from a payday loan with a bad credit score; the timing will be subject to your bank’s online transaction policies.
Are no-credit-check payday loans more expensive than traditional loans?
Yes, no-credit-check payday loans have significantly higher interest rates than traditional loans, because no-credit-check loans are riskier for the lenders, and they charge high interest to mitigate their risk.
What happens if I can only repay a payday loan with credit checks on time?
Repaying a payday loan on time will protect your credit score and also increase your acceptance rate for future loans, showing lenders that you can handle repayments responsibly.
Can payday loans without credit checks improve my credit score?
It is mostly unlikely, because most lenders that provide payday loans without a credit check don’t report timely repayments to major credit bureaus, meaning timely payment will not show on your credit report.
Using the MoneyStar, you may get from R100 to R35,000 in just 5 minutes.
Applying won’t affect your credit score
Micah Sedres
MoneyStar expert Micah strives to navigate finance niches like credit cards, loans, and mortgages easily. She helps hundreds of readers in credit building and provides money management tips. After regularly working for brands like Businesslive.co.za, she joined the MoneyStar.co.za team as a staff writer to develop credit product reviews and comprehensive guides mainly focused on credit scores and loan/card offers.
