South Africa is currently experiencing tough economic times. Inflation is rising and unemployment is sky-rocketing. Food price, electricity costs and fuel price are all increasing causing the consumers’’ pocket to bleed. Unfortunately the above increases will have serious effect on the buying power of the consumers in South Africa. It is for this reason that most of us want cashloans to pay for some stuff.Cashloans have been famous since the banks, some years back were reluctant to give their clients cash loans. The created a business opportunity for other investors who saw the need to assist people who the banks could not loan them money. Since then, there has been an increase in companies offering cashloans to consumers.
Seeing that the private money lenders were profiting in providing personal loans to people, banks too, follow suite and started offering cash loans to their clients and ultimately any one who qualifies. The only problem with banks is the fact that their lending criteria is a little bit strict. For example if you have 1 returned debit order or if you are blacklisted, the bank will not borrow you money even if you can afford to repay the cash loan borrowed. Now we even see banks giving out cash loans online in reaction to the micro lenders.
When cashloans are given, the requirement is that one must be in a position to afford to repay the loan. Affordability to repay the loan came into picture with the promulgation of the National Credit Act of 2005 to prevent consumers from been over-indebted. The Act also regulates the interest rates levied on the cash loan amount.
Coming back to the micro lender, the lending criteria is relaxed and although key to cashloan approval, you still have to pass the affordability test. Affordability means that you should be able to repay the amount of personal loan borrowed to you and still be able to buy basic necessity of life such as bread and milk. Micro lenders are able to approve your personal loan application even if you are blacklisted. The rational behind that is the fact that even if you were, at sometime, blacklisted, if your cash flow has improved, either because you got a new well paying job or because you got your hefty salary increase, you should not be judged on the previous inability to pay.
However, the New Credit Act of 2005 is quite clear on transactions which falls within the act, if you cannot pass the affordability test, no cashloan should be given to you. Those micro lenders which fails to comply with the “affordability test” risk harsher actions, including fines, from the National Credit Regulator for failing to comply with the provisions of the Act.
However it is also important to help those consumers, who can afford to repay cashloans to get money to help themselves. As a consumer never borrow money to pay other debts as this is a vicious circle which will soon catch up with you. You will be unable at some stage to pay your creditors, let alone to qualify for a loan. This will make the situation worse for you as you may end up been sequestrated, been under administration and been under debt review. Take your own responsibility, do not apply for a cashloan if you cannot afford to repay it . Many micro lenders offers fast loans to people and it is your responsibility to analyze your own situation before you apply. The same goes to all micro lenders, let us encourage responsible money lending and borrowing.