South Africa and the Evolving Online Loan Industry
South Africa may not be as digitally advanced as some other more digitally developed countries but as they become more and more tech savvy an increase in possibilities are opening up to them. This is largely thanks to South Africa’s increased adoption of smartphones and tablets. The country’s financial comparison search engines may not be as sophisticated as that of the USA and UK but the payday loans market continues to grow and migrate online as more and more fintech companies enter into the ZA market place thanks to this increased digital user adoption.
Applying For Loans Online
The payday loan market is undoubtedly an industry that has come under increased scutiny of late but, needless to say, worldwide it’s worth R400 billion and becoming increasingly accessible as companies now offer a complete online solution to applying for a loan from start to finish. The service is instant and loans are generally offered of between R100 and R2500 and made available within hours. The more sophisticated sites offer complete transparency with sites like Wonga stating their terms and offering slider tools to enable the user to calculate how much they want to borrow and the interest rates that the borrower will pay.
Unlike credit card companies and other secured lenders the more reputable payday lenders aim to keep people in debt for a short term. Once the money is loaned a collection date for the full amount is arranged ranging from days to weeks from the date of the loan. Of course there are lenders out there who will continually extend the loan and allow users to keep borrowing and making minimum payments however certain companies ask you to consider your options before borrowing as they will not allow you to become trapped in a spiral of debt by extending or consistently lending. In fact on the Wonga website they clearly state “Unlike some lenders or credit card providers, we won’t keep extending your existing balance or encourage you to make minimum repayments . So please think very carefully before you apply, because we expect you to repay us when you promise to”. Sounds harsh but by doing this they are actually protecting the borrower.
Finding An Ethical Lender
Of course the trouble is that there are companies out there that aren’t as ethical as some of the more advanced, reputable companies and the stigma that is associated with payday loans is , unfortunately, the elephant in the room. The benefits of the online only lenders however is that overheads are lower and this can be transferred to the borrower in the form of lower interest rates.
As the South African fintech industry continues its digital evolvement and the platforms on which sites are accessed get more sophisticated the uptake of these loans and the way in which its users access them will no doubt facilitate an increase in this kind of borrowing.
When borrowing against Payday loans it is important to ensure that you know what you are getting into and avoid the debt trap and that you can afford to repay the loan and have a plan to do so.
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