One of the most asked questions for bad credit borrowers is how to get a loan under debt review. Many lenders will decline loan applications from anyone with a bad credit record, let alone an applicant who has struggled with debt to the point of counseling. Here are some things you need to know.
What Does it Mean to be Under Debt Review?
In South Africa, being under debt review means you have failed to manage your debt and applied for protection from your creditors through the National Credit Act. This is similar to filing for bankruptcy in the United States.
This process is managed by a debt counselor who will assess your financial situation and create a step-by-step debt repayment plan. Once the process has been completed, your credit record will reflect that they are under debt review for the next five years. Lenders are generally not willing to offer loans to under-debt-review clients.
Is It Possible to Get a Loan Under Debt Review in South Africa?
The short answer is yes. However, this is only possible when dealing with lenders who don’t check the credit scores of their applicants. This excludes banks and the majority of traditional lenders.
There are many microfinance companies that offer no-credit-check loans in South Africa. This means they just check whether you currently earn enough to pay back any money you borrow. As such, they don’t have a way of even knowing that you are under debt review.
What Types of Loans Can You Get When Under Debt Review?
If you are under debt review, you can apply for payday loans, no-credit-check loans, blacklisted loans, and pawnshop loans.
Payday loans are short-term loans that are typically used to cover unexpected expenses. These loans are usually used by people who need cash quickly but don’t have access to bank loans.
For instance, you can turn to a payday lender if you need money to pay for car repairs or medical expenses. These loans are usually for small amounts and come with short repayment periods. In South Africa, most payday lenders will give you a maximum amount of R8 000, due to be paid back within six months.
The application process is usually quick and easy, requiring little to no paperwork. Lenders typically require proof of income, a valid South African ID, and a bank account. In some instances, they may also want your recent payslip.
It’s important to note that payday loans are quite costly. The interest rates are high. Therefore, you must only use them as a last resort. You should also thoroughly review the terms and conditions and seek professional financial advice before applying.
Here are some examples of payday lenders to approach for under debt review loans:
Finbond – This microfinance provider offers a range of loan products, including personal loans, payday loans, and microloans, to clients who may not have access to traditional forms of credit.
Bayport – Bayport is a financial services company that provides personal and business loans to individuals and businesses in South Africa.
Easy Money – Easy Money Loans South Africa provides fast and convenient online loan solutions for those looking for quick access to financial assistance.
No Credit Check Loans
Some lenders in South Africa don’t conduct credit checks as part of the application process. Instead, they focus on your income and ability to repay the loan. These loans are often marketed as an option for people with poor credit or no credit history. And since the lenders don’t check with credit bureaus, they have no way of knowing that you are under debt review.
Examples of lenders who offer no credit check loans in South Africa include:
Easy Cash Loans: They offer loans with no credit check, and you can borrow up to R8 000, and the repayment term is usually not more than six months
Wonga: This online lender offers short-term unsecured loans between R500 and R4,000 with repayment terms of up to six months. The company provides credit counseling, budgeting advice, and debt consolidation services.
It’s important to note that while no credit check loans may seem appealing, they come with high interest rates and fees. It’s recommended to go through the terms and conditions of the loan very carefully and to seek professional financial advice before applying.
Blacklisting in South Africa is more of a marketing term than anything else. This is because, legally, no one is allowed to blacklist you. This term generally means your credit score is so low that lenders turn you down for loans all the time due to a history of defaulting on loans. It’s also possible that you have unpaid debts that have been reported to credit bureaus.
Examples of lenders who offer blacklisted loans in South Africa include:
XCELSIOR: They offer blacklisted loans of up to R50 000 with repayment terms of up to 60 months
Speedy Loans: They offer microloans for people who have a bad credit record or are blacklisted. You can borrow up to R50 000, and repayment terms can be up to 60 months.
Blacklisted loans are generally expensive. They come with high interest rates and fees. As such, you should avoid them if you are struggling with finances. They tend to make your situation worse.
Pawn Shop Loans
This is the easiest way to get money if you are under debt review and need urgent cash in South Africa. Also known as “pawnbroking” loans, you can think of these credit packages as secured short-term loans.
For collateral, you can provide personal property, such as jewelry, electronics, or other valuables. Pawn shop loans are typically for a small amount of money, and you are required to reimburse within a few weeks or months.
To obtain a pawn shop loan, all you need to do is take the collateral to the pawn shop. The pawnbroker will assess the value of your item(s) and tell you how much they are willing to give you. Once the value is determined, the broker then offers you a loan for a portion of the item’s value, typically around 50%.
Pawn shop loans have a life of 30 days in most instances. When the term is over, you can repay the loan, including interest, and retrieve your belongings.
Pawn shop loans can be a quick and easy way to get cash, but they also come with high interest rates and fees. Additionally, it’s important to note that they are not regulated by the National Credit Regulator. This means that the interest rates and fees can vary depending on the pawn shop.
Did you know that you can pawn your engagement or wedding ring at Lamna Finance to get cash?
Now you know how to get a loan while under debt review. However, it’s important to note that failure to manage funds properly landed you in this position. As such, you must only take out a loan if you absolutely need to. Otherwise, you should cut your expenses and live within your means for the foreseeable future.
Can I get a Home Loan While Under Debt Review?
Unfortunately, the answer is no. Even if you come across a website that describes how to get a home loan under debt review, it’s likely inaccurate information. To get a home loan, a lender will run a hard credit inquiry, and this will reveal that you are under debt review. Hence you are not to be given any type of credit until the strike is lifted.