Short Term Loans Over 6 Months – South Africa Insider

Welcome to our informative blog where we do nothing but bring to you the best of everything in south africa. In todays post, we will be talking about short term loans over 6 months. Kindly take your time and read this amazing piece.

About Short Term Loans In South Africa

Short-term loans are an easy method to receive money in an emergency. You might use the borrowed funds to fix cash flow issues in your business or for other personal reasons. As the name implies, this form of credit is only available for a limited time.

Different South African registered credit providers may define a short period to be between 1-2 years. In most cases, short-term loans must be repaid within a year. They are capable of being processed in as little as 24 hours. Furthermore, even if your credit history is less than stellar, you can still qualify for a short-term loan online.

A short-term loan is thus a good choice for both individuals and organizations seeking to resolve a brief financial problem.

Common Features Of A Short Term Loan

The debt must be paid off quickly, usually within six months or one year.
They typically range from R500 – R250 000.
You can receive a lump sum in as little as 24 hours after application.
They involve slightly higher rates compared to long term loans.
However, they can be cheaper to repay than longer term credits .

Steps To Receiving A Short Term Loan

Determine the amount you wish to borrow and which you can afford to pay back.
Compare short-term loan options and choose a suitable lender.
You should agree with your lender on the following things:
- the interest rate;
- the full amount you have to pay back;
- the period you are expected to pay back the amount; and
- the dates on which the instalments will be paid.
Once you submit your application, you give the lender time to process it. During this time, they may also look at your cash flow history and other financial activities.
If you qualify for the finance, the money is quickly forwarded into your bank account.
You use the funds to cover your immediate financial needs. At the same time, you start paying off the short term loan as agreed until the debt is paid back in full.

What Kind Of Short Term Loan Should You Choose?

Short term loans are usually on offer in the following forms:

Payday loans

Payday loans are widely used in South Africa. They are easily obtained from a variety of trustworthy banks and lenders. Payday loans are typically used to cover an emergency while you wait for your next paycheck.

When your salary is deposited into your bank account, the lender has the authority to withdraw the amount you borrowed plus interest. This sort of financing has extremely high interest rates and is often repaid in a single instalment.

Merchant cash advances

A merchant cash advance is a good solution for firms who are experiencing cash flow and working capital issues. The procedure is straightforward: a lender lends money to a firm. In turn, the lender receives access to the business’s card terminal.

Each time a consumer pays using a credit card, the lender deducts a tiny instalment until the credit is paid in full.

Short term online loans

An online loan can be obtained by visiting the website of an accredited lender and completing an application form. In any event, both the application and the processing are done online.

When your credit is granted, the funds are immediately deposited to your bank account. Repayment is often accomplished by the lender automatically deducting the instalments from your account.

Invoice Financing

This sort of financing is intended to assist businesses while they wait for customers to pay their invoices. Businesses can so borrow money on their overdue bills (accounts receivables). The amount is often a percentage of the overall invoice amount.

When the consumer ultimately pays the invoice, the lender takes the amount due by the firm, including interest and other service fees.

Lines of credit

Lines of credit can be thought of as company credit cards. The line of credit can be used by the company. The amount is determined by the credit line’s limit.

The company must then repay the amount borrowed plus interest at a later date. The number of monthly payments is also determined by the amount of money borrowed by the firm through the line of credit.

Benefits of short term loans

You pay less on interest – This is because you typically have to pay off the debt within a year. Compared to long term loans, this results in lower interest payments.
You can access the cash quickly – Since the debt has to be paid back within a short time, most lenders are willing to draw down the money quickly. Once your application is successful, the money is transferred into your bank account (sometimes within minutes).
There are no strict requirements – Your credit score doesn’t have to be perfect for you to receive a short term loan. Most businesses and individuals easily qualify for this type of finance. This is because the borrowed money is usually a smaller amount compared to longer-term arrangements.

Disadvantages of short term loans

Penalty fees can be costly – If you don’t repay the credit as agreed the penalty fee and interest rates can make the short term loan very costly.
Dealing with untrustworthy lenders will cost you – While short-term loans are relatively easy to access some lenders can exploit you by charging unreasonable fees and interest rates.
You can only borrow small amounts – Because the lender requires you to pay back the amount in a short period, they will only usually give you a smaller loan amount.