PERSONAL LOANS
Bad credit score? It’s not the end
Not everyone has a perfect credit history. Missed payments, defaulting on previous loans, declaring bankruptcy, or even fraud that you may not yet be aware of will all contribute to your credit score. It’s this history that determines your eligibility for a personal loan and, if your past credit behaviour appears less than responsible, it’s unlikely that traditional lenders like the major banks will approve your loan application.
But a bad credit history doesn’t put you out of the running entirely. Smaller, non-traditional lenders could provide different options for individuals with bad credit scores.
What’s in a score?
Do you know what your credit score is? There are a number of organisations that can provide you with your credit report for free. Try ClearScore ZA, TransUnion, or Experian for quick access to your credit score.
Once you’ve established your credit score, you’ll have an idea of where you’ll stand with lenders.
Where can I get a loan if I have bad credit?
If you can’t wait until you’ve improved your credit history, you have options. A number of non-traditional lenders offer bad-credit personal loans. Typically, these lenders have higher interest rates and fees when compared to traditional lenders.
If you can’t wait until you’ve improved your credit history, you have options. A number of non-traditional lenders offer bad-credit personal loans. Typically, these lenders have higher interest rates and fees when compared to traditional lenders.
If time is of the essence, you can apply for a payday or short-term loan. These loans require repayment within a few weeks and typically don’t require any collateral. Take note: these short-term loans tend to have very high interest rates compared to other loans.
Credit Unions are also an alternative to traditional lenders. While it can take a few weeks for your application to be approved, credit unions offer financing with comparatively lower interest rates. Credit unions also offer small short-term loans that can be used specifically to improve your credit score so that you can apply for additional financing elsewhere.
Take note: short-term loans tend to have very high interest rates compared to other loans.
Your bad-credit loan will either be secured or unsecured. A secured loan requires something of value – known as ‘collateral’ – to back the loan. This can be in the form of a car, house or even your savings account. An unsecured loan doesn’t require any collateral. Because the risk is higher to the lender, the interest rates on unsecured personal loans are higher.
It’s essential to check that the lender adheres to the rules and regulations of the National Credit Act to ensure that your rights as a consumer are protected. Loan sharks may offer more desirable terms, but they are associated with hidden interest and fees that can be close to impossible to pay.
Check that the lender adheres to the rules and regulations of the National Credit Act to ensure that your rights as a consumer are protected.
I’m planning on applying for a personal loan. Now what?
There are a number of lenders out there offering personal loans, but finding the right lender that ticks all your boxes can be overwhelming. That’s why we’ve done all the hard work for you! We’ll find comparative loan offers specifically for you – at no cost!
PUBLISHED DATE
18 July 2022
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