Three Questions Answered about Online Loans in South Africa 

 

 

 

1.  Are Online Loans Safe

Online loans are a convenient way to borrow money without going to a physical bank or cash loan shop. Online loans are safe when you apply with a legitimate registered lender with the National Credit Regulator (NCR). Legitimate credit providers must meet the same strict lending rules as brick-and-mortar banks and will disclose the total cost of credit, including interest, fees and insurance.

However, you should be aware of scams. The National Credit Regulator (NCR) in South Africa has warned against bogus credit providers, reiterating that only businesses registered with the regulator can provide loans to the public. 

It is illegal for lenders to take money upfront before providing someone with a loan. You can also check if the lender is a member of Micro Finance South Africa (MFSA).

 

Some tips to avoid online loan scams are:

• Check the lender’s credentials and reviews before applying for a loan.
• Look for signs of encryption and two-factor authentication on the lender’s website or app.
• Be wary of online adverts that promise to rehabilitate your credit record for a fee.
• Avoid paying any upfront fees or sending money to unknown accounts.
• Do not share your personal or financial information on social media or WhatsApp.
• Online loans can be a useful option for your financial needs, but you should always research and compare different offers before making a decision. 

Remember, if something sounds too good to be true, it probably is. Avoid overusing credit. Additionally, you should read the terms and conditions of the loan agreement carefully before signing up for it or accepting the loan terms. 

If you are unsure about the legitimacy of a lender, it is best to avoid them and look for other options.

 

2. Will online loans affect my credit

Online loans are a type of credit that can affect your credit score, depending on how you use and repay them. 

 

Here are some ways that online loans can impact your credit score:

Applying for online loans can cause a small, temporary drop in your credit score due to hard enquiries made by lenders.

Most online lenders only do a soft check initially that won't affect your credit score. 

Only once they get to the full assessment stage a hard check will be done to decide whether to approve your loan application. This hard check can lower your score by a few points and stay on your report for up to two years. 

Repaying online loans on time and in full can help you improve your credit score. Payment history is the most important factor in your credit score. Making consistent payments shows that you are a reliable borrower who can manage your debt responsibly.

Consolidating online loans can also affect your credit score in different ways. Debt consolidation is when you take out a new loan to pay off multiple existing debts, such as credit cards, personal loans, or payday loans, to simplify your finances.

3. Online loans immediate approval?

Due to National Credit Act requirements, loans can't be approved instantly or immediately. Any loan or credit that you apply for will be subject to a credit assessment and affordability check. However due to the nature of online loans, you can apply for and receive it quickly, sometimes within hours. 

 

In summary, online loans can be safe if you deal with reputable online lenders. Online loans can affect your credit score in both positive and negative ways, depending on how you use and repay it. Online loans won't be available, instantly or immediately, but can be completed within hours of your application.