Compare Best Short Term Loans In South Africa

Compare live and best rates for small and short term loans in South Africa

Sandra Ti
Finance Journalist
Published: Jun 29, 2024

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Short-term or payday loans, designed for borrowing a small amount of money for a shorter period, are a financial tool that can be used effectively if you understand the process. These loans, typically offered at higher interest rates and extra fees, should be used only if you can afford to repay them. Read our guide below to learn more about how short-term loans work in South Africa and what you should consider before applying.

What is a short term loan?

Short term loans in South Africa, similar to well-known payday loans, are designed to provide quick access to funds with easy approval. Depending on the lender, these loans range from R100 to R5,000 and offer a flexible repayment period, allowing you to settle the amount within six months to a year.

Short-term loans fall under the category of unsecured personal loans, carrying higher interest rates and a brief repayment period, usually lasting up to a few months. They are most suitable for addressing short-term financial challenges until you receive your next paycheck.

The National Credit Regulator (NCR) regulates the maximum charges for short-term and other loans, but they can still be expensive. Before applying for these loans, ensure you are fully informed to secure the best short term loan deal.”

How are short term loans different from other types of credit?

  • Small amount loans: The final approved loan amount depends entirely on your lender and your affordability level. However, short term loans in South Africa usually range from R100 to R5,000.
  • Shorter loan terms: Unlike installment loans or long term loans, short term loans are designed to provide fast cash for a shorter period of time. They might be an excellent option during short term and financial emergencies. However, some lenders offer short-term loans for six months to 1 year.
  • Less stringent eligibility criteria: In most cases, short-term lenders mainly focus on your ability to get the loan and are not interested in your previous credit rating.
  • Higher interest rates: Payday loans or short term loans have higher interest rates and fees than other forms of credit options in South Africa. It is always important to calculate the overall loan cost before you apply.

How to compare payday loans or short term loans?

Comparing short-term or payday loans is very important as they are expensive ways of borrowing that may lead to a debt cycle. Before applying, you should look following:

  • Loan amount: Typically, short term loans offer up to $5,000. However, your approval amount totally depends upon various factors such as your income, credit history, and ability to repay the loan.
  • Loan term: Short term loans or payday loans range from 16 days to 12 months. Remember, longer repayment means lower monthly repayments, but you must pay more extended monthly fees, increasing loan costs. The best way is to apply for a loan if you can repay it within the agreed loan term.
  • Rates and fees: Both types of loans are famous for their high interest rates and other charges. This includes additional fees that make such loans expensive. Make sure to calculate and estimate your loan cost in advance before applying.
  • Repayments: Your loan repayments will be fixed based on your income structure. It can be weekly, fortnightly or monthly. Before applying, calculate the overall cost of your loan repayments. It helps you to see whether a short term loan fits into your budget or not.
  • Turnaround: If you are facing a financial emergency or want money as soon as possible, you should consider how long lenders will deposit the money into your account. Some lenders disburse cash minutes w, while others may take few hours or longer.

Am I eligible for a short term loan in South Africa?

The eligibility requirements to apply for an online short-term loan in South Africa are flexible as compared to other traditional loans. Though lending criteria will differ between lenders, you must match with following essential requirements to qualify for a loan:

  • You must be over the age of 18
  • You must be a citizen or permanent resident of South Africa
  • You must be able to provide identification
  • Active bank account
  • Full-time employment or enough monthly income to repay loan

What are the pros and cons of short term loans?

Unlike traditional banking loans, short term loans have easier eligibility criteria, even you may qualify with bad credit history. Let’s check out pros and cons of short term loans.

Pros of short term loans

  • Easy to apply.
  • Quick funds when you are in need.
  • They have fewer requirements than other loans.
  • Available even to those with bad credit.
  • The flexibility of repayments.
  • It is an unsecured loan.

Cons of short term loans

  • They are expensive.
  • Smaller loan amounts.
  • Short repayment terms.
  • It is easy to get trapped in a cycle of debt.
  • Higher interest rates and fees.

How to determine if a short-term loan in South Africa is right for you?

If you are considering a short term loan, this option may be only ideal for you if:

  • You need funding immediately to cover cash flow gaps
  • You can manage the short repayment timeline and higher payments
  • You can’t qualify for other credit options
  • Given your current credit situation and revenue, it’s crucial that you find a lender who offers relaxed eligibility requirements.
  • You’re currently dealing with financial emergencies such as medical expenses and car repairs, which have put you in a tight spot.

You should avoid taking short term loans to pay for:

  • Repayments for existing debts.
  • Everyday necessities.
  • Holidays, big-ticket items like cars, and
  • Other non-essential expenses and purchases that can wait.

How can I apply for a short term loan with RandHub?

Applying for the best online short term loan is easy and can be done online. Here are the basic steps which you need to follow to apply with RandHub:

  • Apply online: Fill out the online application form with the required details, including your personal information, employment details, and financial history.
  • Approval process: Once submitted, rest assured that one of the lenders will swiftly review your application to check eligibility and creditworthiness.
  • Review and accept the loan offer: If approved, please read your loan offer’s terms and conditions carefully before accepting it.
  • Receive funds: After you accept the loan offer, the funds will be directly and securely transferred to your mentioned banking account within minutes.

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Frequently Asked Questions About Short Term Loans

Do short term loans affect credit rating?

A short term loan can potentially boost your credit score when repaid on time and in full, leading to a positive impact on your credit report.

What are short term loans used for?

Short term loans are expensive to borrow money, so they are only used to cover minor and temporary financial needs—like paying unexpected bills, car repairs, or making ends meet.

Do short term loans have higher interest rates?

Before you apply, keep in mind that short-term loans have higher interest rates and are offered for shorter periods.

How much can I borrow?

Typically, payday and short term loans range between R100 and R5,000. Keep in mind that the actual loan amount depends totally on your lender and your loan affordability.

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