South Africa’s induction into the digital age has given payday loan companies a new playing field in the country’s marketplace. Instead of long queues and complicated applications, people now have easy access to money online, but such access can sometimes do more harm than good.
In an effort to prevent people from falling into debt, South Africa’s National Credit Act (2005) was created to protect consumers and make credit and banking services more accessible. However, the rising cost of living in South Africa, coupled with the continued ease of access to quick credit has led many into debt.
More recently, several lenders have made an attempt to redefine the payday loan and how it can help people. Launched in 2007, British payday lender Wonga very quickly developed a recognisable brand, with a key focus a commitment to responsible lending. In the wake of short-term loan controversies, such openness and honesty has never been more important.
Wonga has made an effort to overhaul its image in order to appeal to new and existing customers alike. Its website is an example of such transparency at work, as customers can use the site’s friendly interface to quickly and easily understand exactly how much they can borrow and how much they will need to pay back over time.
Although redefining the payday loan as an opportunity to get easy credit in an open and honest way can only be a good thing, it is vital to remember that such short-term loans are designed to be for once-off situations when the need is great. When it comes to daily living, relying on payday loans is not the answer.
Budgeting for emergencies
Even if you are the kind of person who budgets for emergencies, there may come a time when your emergency fund is not enough, and you may find that you need to borrow money fast. In such situations, a responsible short-term loan provider can be preferable to an unauthorised bank overdraft or defaulting on your credit card payment – both of which can result in extremely heavy fees.
A short-term loan should only be used in an emergency, and never as means of funding your lifestyle. However, if you do find yourself in dire need, a short-term flexible loan can help you borrow money fast, and using a loan calculator on a website such as Wonga’s can help you figure out how much you can afford to borrow.
Never borrow money if you are unsure of your ability to pay it back on time, as this can lead to heavy costs. Use a loan calculator to work out how much you will need to pay back and when, and then factor it into your budget. If you factor your short-term loan repayments into your budgeting plan, you should be able to pay off your loan on time and resume life as normal.