Micro Loans for Blacklisted Explained
Posted by financial advisor on
Often the micro loans for blacklisted are the only option which you have, given that you have not managed to repay your debt in the past. That is why it is best to learn as much as possible about them. The better informed you are the better the decision that you make will be.
Short Term Credit transaction
The National Credit Act defines micro loans as short term credit transactions. With such loans for blacklisted you can borrow up to R8 000 in most cases. The term is no longer than 6 months. The interest is set on a monthly basis. The Act stipulates that it should not exceed five per cent a month. This means that the annual interest rate must not exceed sixty per cent. You should check to confirm that the interest which you are charged does not exceed this percentage.
As you can see, the interest rate on micro loans is fairly high. This is because these are unsecured loans which do not require a credit check.
This means that they are naturally more expensive than their traditional counterparts. However, the short term actually helps to bring costs down. At the same time, the short term pushes the monthly instalment up.
One of the advantages of these loans is that they can be used as lines of credit. If you pay your first two or three instalments timely and in full, the lender may be willing to extend to you the remainder of the principal as a line of credit. The interest rate should not exceed the maximum set for such loans.
You should know that micro loans for blacklisted are available from numerous small lenders even though they are not offered by banks like Capitec Bank, Absa Bank and FNB.