Supreme Guide to Loans For Blacklisted Individuals in South Africa

Supreme Guide to Loans For Blacklisted Individuals in South Africa

Key Takeaways

  • You can qualify for a loan even if credit bureaus flag your profile.
  • You can be blocked if you fail to pay your debts on time.
  • Secured and guarantor loans are some of the best options if you are blocked.
  • You can be flagged if you fail to pay your debts on time.
  • The best way to improve your credit score is to pay your bills and debts on time.
  • Before you apply for a loan, it’s essential to obtain a complete picture of the fees and interest rates.

Getting a loan when you are blocklisted might seem impossible. The good thing is that it’s not. Many lenders offer credit to South Africans who have been blocked or have bad credit.

What is Blacklisting?

You can think of blacklisting as a warning to lenders that giving you money is not a good idea. If you borrow money and fail to pay it back on time or at all, the lender will send your profile to various credit bureaus in South Africa. Once they receive your profile, it will be flagged.

Supreme Guide to Loans For Blacklisted Individuals in South Africa
Supreme Guide to Loans For Blacklisted Individuals in South Africa

You should set aside time each month to review your credit record and see your score. A credit report summarises your loan and credit payment behaviour. It gives lenders and financial institutions an idea of the risk they might be taking by lending money to you or providing goods and services on credit.

A good credit score indicates that you will likely repay your debts on time. On the other hand, a poor credit score tells a different story altogether. It discourages lenders from giving you money.

Checking your credit profile helps you see if there are no errors or if no criminal activity has been done using your name in a way that will affect your record. It’s common to find inaccurate information on your profile. When you find incorrect information on your profile, you should correct it as soon as possible.

South Africa has four main credit bureaus: Transunion Credit Bureau, Experian Credit Bureau, Compuscan Credit Bureau and XDS Credit Bureau.

We understand that getting blocked is not a voluntary process. Sometimes financial pressures arise, and you may fail to pay back the money you owe on time.

Factors That Cause Blacklisting

Financial institutions can flag you based on your credit habits. However, you don’t get blocked straight away. The main factor that might cause you to be blocked is defaulting on your loan payments.

What first happens is that delayed payments will lower your credit score. When you keep failing to pay back what you owe and more lenders submit your profile, you will get blocked.

It is straightforward to borrow money to get that new washing machine on special. Next, you see a bigger and better TV, and you take another loan to finance the purchase. Before you know it, you are heavily in debt and struggle to repay, leading to institutions flagging your profile.

How Do You Know If You Have Been Blacklisted in South Africa?

Here are some indications that you may be blocked:

  • Different lenders and banks keep declining your loan applications
  • When you apply for jobs that you aptly qualify for, but companies turn you down
  • You try to rent a new property and get declined
  • Your applications for bonds and vehicle financing keep getting declined
  • You have been struggling to repay the money you owe, and the lender has approached the courts, which summons you;
  • You check your credit score, and it’s shallow.

What is a Blacklisted Loan?

Many lenders offer loans to individuals without a stellar credit rating. A blocked loan enables you to get cash even if your credit score is meagre and bureaus have flagged your profile. MSome of the most popular lenders in South Africa offering loans for individuals who have been flagged as high-risk by data collection agencies include:

  • EZI Finance
  • Hoopla
  • Lime
  • Wonga
  • iBank,
  • Binixo.

Types of Loans for Blacklisted Individuals in South Africa

Here are some options to consider if credit bureaus have flagged your profile.

Secured Loans

A secured loan enables you to get money and use it as value as security. This extra security on the lender’s part means there is less risk. Additionally, they may give you a bigger loan at a lower interest rate than an unsecured loan. This is the most common loan among blocked individuals.

With a secured loan, the risk is higher on your side, and this is because failure to pay back the money will result in your losing your valuables.

On the flip side, secured loans allow you to get the money you need faster, be it to cover a medical emergency or a pressing financial need. They come in handy when you cannot get a loan from a bank or traditional loan institution.

In addition, a secured loan has lower interest rates. Also, you will be able to get more money if your property or valuable is worth a lot. For instance, if you use a car as security for your loan, you can get up to half of what the vehicle is worth.

Also, secured loans generally give you an extended period to pay back the money you owe.

Please note that all assets used as collateral for loans must be fully paid for and registered in your name. Also, the lender assumes asset ownership until you pay back the loan amount and interest.

Once you pay back the money, you will reclaim full possession of your asset. The items you can use as collateral for your loan include watches, cars, jewellery, houses, artworks and antiques, yachts, trucks, motorbikes and more.

Guarantor Loans

A guarantor loan is one you take out with someone else – usually a family member – who then promises to pay your debt if you can’t. This person is the guarantor.

This is another loan that is ideal for individuals who are blocked. Having a guarantor can make it easier for your loan application to be accepted, even if you have a low credit score.

Guarantor loans are an option for those who find it difficult to get a loan independently. The guarantor acts as a safety net for the lender. As a result, if you default, they will be responsible for paying back the money. This means that both you and your guarantor will be legally liable for the loan.

A guarantor should be:

  • Someone who has a favourable credit score and is eligible for a loan.
  • A friend or family member who has consented to stand in as a referral.
  • Over the age of 21
  • Someone with proof of income or who owns a valuable asset like a home.
  • Someone who can trust you to make the loan repayment on time.

To maintain this trust, you must take a loan amount that you can pay back. This will also help increase your credit rating, which is crucial if you clear your name and improve your credit reputation.

Like secured loans, which rely on collateral, guarantor loans are usually quicker. However, interest on guarantor loans can be higher than on standard loans. Also, missing repayments can damage your relationship with the guarantor.

Another thing to note is that guarantors may be taken to court or lose assets if they can’t repay the loan you will have failed to repay. Consequently, this may also affect their credit score.

Debt Consolidation Loans

A debt consolidation loan lets you incorporate all the money you owe into one loan. If you borrowed money from several lenders, updating all the payments, interest rates, and fees may be difficult. A debt consolidation plan will simplify this for you.

Payday Loans

This is the most popular loan offering in South Africa. A payday loan is almost self-explanatory. It’s money that you get and return when you receive your salary. Most lenders who offer this service will deduct money directly from your bank account. As such, when you apply, they will require details like the account where your salary gets in, proof of ID, and proof of residence, among other things.

No Credit Check Loans

As you might imagine from the name, no-credit-check loans are given by lenders who don’t mind your credit history. They are all interested in finding out whether you can pay back the money. They also check your income level to determine how much would be safe to give you. They also check your income level to determine how much would be safe to give you. In most instances, these loans are secured to lower the risk on the lender’s part.

Who is Eligible for Blacklisted Loans?

Lenders look at several things when figuring out whether to give you a loan. Here are some things they consider:

  • Do you have a steady income?
  • Can you afford to pay back the loan after your expenses?
  • Do you have other pending loans?
  • Are you over the age of 18?

The lender will decline your application if you can’t afford to pay back the loan.

Why Should You Apply for a Blacklisted Loan?

  • It can help with money for emergencies.
  • You can improve your credit rating by making payments on time.
  • You can use the loan to consolidate your debt.

What To Consider When Taking Out Blacklisted Loans

Here are some things to think about before you start approaching lenders.

Compare Interest Rates

It’s essential to find an affordable loan. The majority of lenders use higher interest rates for blocked individuals. As such, you should set aside time to compare interest rates from different lenders. Such loans are already considered expenses, so you should look for the most affordable ones.

Assess All Costs of the Loan

There are lots of costs associated with loans. This includes initiation, origination, late payment, early payment, and other lender-specific fees. Before you approach a lender, you should find out what their fee structure is like. That way, you can tell whether the loan is affordable or not.

Consider Your Needs Before Choosing The Right Amount

It’s crucial to apply for the amount that you need. Most people are tempted to take out more because they can afford more. This is a wasteful expenditure, and it will worsen your situation.

Assess Your Ability To Repay The Loan

Before you receive money from a lender, it’s essential to ensure that your income is enough to pay back the money. This means you must look at how much you earn and spend per month. Are you left with enough money to cover loan repayments? If not, then taking out a loan is a bad idea.

What Documents Are Required for the Application

  • A South African green bar-coded identity document
  • Latest paycheck stub or a payslip
  • Up-to-date three months bank statement
  • For secured loans, you will need proof that you own the home, vehicle or property you use as collateral.

How Much Can You Borrow?

You can get no set amount of money from lenders if you are considered a high-risk borrower. Lenders will look at how much you earn, your current debts, and whether you have collateral. You can increase your chances of getting more by getting a guarantor.

How to Apply for a Loan When You Are Blacklisted

Here are the steps you can take to apply for a loan when credit bureaus have flagged your profile:

  • Assess your current financial situation and calculate your affordability
  • Find a lender who offers loans for blocked individuals.
  • Identify items that you can use to secure your loan.
  • Check interest rates and fees.
  • Find out loan requirements and eligibility criteria.
  • Submit your application

How to Increase Your Chances of Approval

  • Make sure you have all your documents in place.
  • Avoid applying for many loans simultaneously, as this may discourage lenders from giving you money.
  • Avoid shifting positions too much and changing addresses, as this can make lenders suspicious.
  • When applying for a blocked loan, always put a figure you can afford to pay back. Lenders may choose not to give you money if you don’t have enough money left each month to make your loan payments.
  • Always revise your application before submitting it, and attach any supporting documents required by the financial institution you work with.
  • Make sure all the details you provide on the application form are accurate. Simple mistakes or typos can make lenders turn down your loan application or lengthen the application process.
  • Look for ways to boost your income and pay down debt.
  • Consider getting a loan with a cosigner. Having a cosigner with a good credit score can lower your chances of being denied a personal loan and help you get a better interest rate.

What is the Difference Between Bad Credit Loans and Blacklisted Loans

Bad Credit LoansBlocked Loans
This loan helps you if you have a lower credit scoreThis loan allows if loan data collection agencies have blocked you.
Lower interest ratesHigher interest rates
You can get more moneyYou get less money because it’s considered riskier to work with you.

Which Lenders Offer Blacklisted Loans in South Africa

Here are some of the most reliable lenders to approach if your credit profile has been flagged:

Money Loans

This lender offers credit packages between R2000 and R150 000. One of the main advantages of working with this lender is that they are not strict abouts what you can use the money for. You have to prove that you can pay it back with interest.

Loansfind

Loansfind is another excellent resource if you have a less-than-stellar credit rating. They will help you find a package that suits your needs. The main pro is that you can compare different packages in one place.

Ayoba Loans

Global extends its services to individuals who earn at least R3,000 monthly and can pay back the money they borrow. Their requirements are not very stricts considering the loans they offer don’t involve credit checks.

Fees and Interest Rates For High-Risk Loans

When you decide to take out credit, the lender will set your interest rate and starting fee based on how risky they think giving your money is. In most instances, you must pay the money back within 24 to 72 months.

The interest rate is how the lender profits from giving you a loan. Most lenders charge between 22.3% and 28% in South Africa. Apart from the interest rate, lenders also charge initiation fees, origination fees, and service fees. Almost all lenders charge a service fee of around R69.

How to Calculate The Cost Of A Blacklisted Loan

Here’s how to can get an idea of how much it will cost you to get cash from a lender if you don’t have a great credit score:

The total amount you will pay back = Interest rate + Initiation Fees + Origination Fees + Service Fees.

For instance, if you are taking out R15 000 and the interest rate is 10%, you can get the total loan cost as follows:

R15 000 + R1 500 + R1 000 + R70 = R17 570

Frequently Asked Questions

Can I get a blocked loan quickly?

Yes. There are several registered lenders in South Africa offering loans to high-risk individuals. The majority of companies providing this service have fast approval processes.

Are there ways to get a better credit score?

The best way to improve your credit score is to pay all your bills on time. Also, if you manage to get credit, ensure you return the money within the agreed-upon period.

How do you get a blocked loan?

The best way to get cash from lenders if your profile is flagged is to use collateral, or you can find a guarantor.

Do blacklist loans help your credit profile?

Yes. Paying back blocked loans on time and in full raises your credit score.

Can I pay off a blacklisted loan before the end of the loan term?

Yes, you can. It will improve your credit score.

Can I get blocked credit for my car?

Yes. However, if you fail to repay it, the lender will sell it, recover their money, and sometimes give you back the remaining amount.

Can I get blocked finance against my pension?

Getting a loan and using your pension as collateral is impossible. This option is only possible if you are not blocked.

Can I get a home loan if my profile is flagged?

Yes. More minor, alternative lenders in South Africa offer blocked home loans. Many can be found online and have a faster application process than traditional banks.

They only need proof of your identification, proof of residence, and three months’ bank statements to show your income.