Micro Loans vs. Secured Loans
Posted by financial advisor on
The fact that you have had problems repaying your debt in the past does not mean that you can never borrow money again. In fact, there are various loans for blacklisted people in South Africa so you will certainly find one which meets your needs precisely. Two of the main options include micro loans and secured ones. Take a closer look at their pros and cons.
Micro loans for blacklisted individuals are available from small lenders which typically operate locally. You can find many such lenders in the large cities like Cape Town and Johannesburg. Their products do not differ much from those of the big four banks like Standard Bank and First National Bank.
When you take out a micro loan, you do not have to place any collateral. The only requirement is for you to be employed and to earn a salary. The lender will present a repayment schedule which you will have to follow.
The lack of collateral is the major benefit of micro loans. That way, the risk for the borrower is lower. However, since the risk for the lender is higher, the interest rate is typically higher as well. Given this, you should try to compare as many products as possible in order to identify the most affordable one for you.
Secured loans require the placement of collateral
This is an asset owned by the borrower. It can be any asset including home equity. It is important to note that such loans can be extended to blacklisted individuals even by major banks in the country.
The main benefit of secured loans is that they come with more affordable interest and monthly instalment. At the same time, you risk losing the asset you have placed as collateral.
It is up to you to pick between these two types of loans for blacklisted.