4 Ways To Get Loans In South Africa (2023)

How To Get Loans In South Africa - Izzyaccess (2023)

There are numerous reasons why you might want to take a loan. – need capital to start a business, to spice up your business, for home improvement, for an academic purpose which can also be labeled as a student loan in South Africa, or for some domestic basic utility bills at home.

There are several loan companies in South Africa, taking a loan from any of the South African loan companies depends on what you want to do with the loan and their mode of operation.

Some of the loans in south Africa are heavily regulated to ensure that customer rights are protected, but sadly not all south African loan companies are well structured with many of them not operating according to the law. That is why you need to be careful with taking loans in South Africa as there are many loan sharks in South Africa. 

There are different ways how people get loans in South Africa, so if you're thinking of how to take a loan in South Africa, here are 4 ways you get loans in South Africa.

Informal lenders

As the name "informal" applies, they are people who offer informal loans, they can be a group of people or individuals who offer loans to people in South Africa, and they often offer their loans at extremely high-interest rates. These are not the usual South African loan interest rates offered by government-approved loan companies.

The informal lenders in South Africa are not operating under the law and as a result of this, may worsen their clients' financial situations instead of helping them. In South Africa, informal lenders are often referred to as mashonisas. They are also regarded as "loan sharks in South Africa".

Why do South Africans take loans from mashonisas?

One major reason why many South Africans take loans from these loan sharks is that the paperwork involved in processing the legal loan can be so frustrating to some, which is why mashonisas are so appealing as there's no frustrating lengthy administration. You can simply borrow money from mashonisas just by handing over your ID or bank card as surety.

When these loans are being communicated to you at first, they may seem harmless, but because they are unregulated with less paperwork, they may even lend money to someone they know can't actually afford to repay the loan and in the long run, people find it difficult to pay back and they face the consequences thereafter.

Microlenders

Another way to get a loan in South Africa is to take loans from Microlenders. Microlenders in South Africa loan out small amounts of money, which could be sometimes as low as R400 and R500. 

There are quite a number of these loan companies in South Africa, as many of them are now specialized in helping people in poorer communities to start micro businesses.

They, as a matter of fact, offer business advice most time and even offer assistance to their clients to set up their businesses. They can be used for small business loans in South Africa.

The setback to this microlending type of loan is that microloans are usually used as payday loans. Most people borrow money that will see them through their month-end debit orders and expenses and then pay back when they receive their next wages.

Pawnbrokers

These types of lenders will take your valuables such as gold, jewelry, electronics, vehicles, motorcycle, and other valuables as surety. They will value the market worth of your items and then lend you an amount based on the valuation of your properties they took.

Your valuables are usually safe with them, and you can then be approved to be given the loan.

The shortcoming with this is, if you are unable to pay the money back within the agreed period of time, the pawnbroker will then sell your valuables as a payback for their money. The amount they sold your valuables is not your concern again.

Personal loans

These are financial service providers that are bound by "strict regulations" when giving out personal loans to people. This is one of the best loans in South Africa you can apply for.

The South African loan interest rate they can charge is not bone-breaking and they do their thorough credit checks to ensure that their customers or rather clients, can be able to repay their loans.

The amount you can borrow ranges from between R5,000 and R150,000 and the maximum term of repayment is 6 years. You can get the lowest interest rate personal loans in South Africa.

Nowadays, you can apply for a loan in South Africa online by sending your documents via email and getting an answer within a short period of time with little hassle. 

Many people have even preferred taking loans in South Africa online. Also, there are several South Africa loan apps online with financial regulations. I'm sure this will save you from the south Africa loan sharks. 

Footnote:

There is no harm in taking loans, only take loans for business and important reasons and not for pleasure.

Take loans you know you can afford to pay back on or before the stipulated time.

Disclaimer

Prices quoted in the article are correct as of when publishing this article. This article is provided only for informational purposes and shouldn't be construed as financial or legal advice.