The geyser bursts on the 19th. Or the car needs new brake pads, the school wants money for a trip, and payday is still eleven days away. Most of us have had a month like that. Short-term cash loans can cover the gap, but only if you go in knowing what they will cost and how you’ll pay them back.
This guide walks you through the process in five steps, from working out what you need to signing the agreement. It’s written for South Africans and based on the rules in the National Credit Act, so the numbers you’ll see here are the real legal limits.
What Counts As A Short-Term Cash Loan?
Under the National Credit Act, a short-term credit transaction is a loan of up to R8,000 that you repay within six months. These are the small, quick loans people use for emergencies and unexpected bills.
Because they’re small and short, the law caps how much a lender can charge, and those caps are lower than many people expect.
At EzyFund you can apply for R500 to R8,000. You fill in one online application, and we match you with credit providers registered with the National Credit Regulator (NCR). The lender checks your details and decides whether to approve the loan.
Step 1: Work Out Exactly How Much You Need
When you’re stressed about money it’s tempting to borrow a round number, or a bit extra “just in case”. Every extra rand you borrow costs you interest and fees, so start with the actual figure.
Write down what the money is for and what it costs. If the mechanic quoted R2,450, borrow R2,500, not R5,000.
Then ask yourself one honest question: is there another way to cover this? A payment arrangement with the school, a few days’ grace from the landlord, or selling something you don’t use may cost you nothing.
A loan makes sense when the cost of not paying is higher than the cost of the loan, for example losing your transport to work.
Step 2: Check The Full Cost Before You Apply
The cost of short-term cash loans has three parts, and the National Credit Act limits each one:
- Interest can be charged at up to 5% a month on your first short-term loan in a calendar year, and up to 3% a month on any further short-term loans in the same year.
- The initiation fee is a once-off fee for setting up the loan. It can be up to R165, plus 10% of the amount above R1,000, with a maximum of R1,050. VAT is added on top.
- The monthly service fee can be up to R60 a month, plus VAT.
Say you borrow R3,000 for one month, and it’s your first short-term loan this year. At the maximum the law allows, you’d pay:
| Charge | Maximum |
|---|---|
| Interest (5% for one month) | R150.00 |
| Initiation fee (incl. VAT) | R419.75 |
| Service fee (incl. VAT) | R69.00 |
| Total to repay | R3,638.75 |
That’s the ceiling. Your lender may charge less, and the loan agreement will show your exact figures. Still, it helps to know the maximum before you start, because anyone quoting you more than this is breaking the law.
Spread the same loan over a few months and the monthly repayment drops, but the total cost goes up, because interest and the service fee are charged every month. Use our free loans calculator to compare different amounts and terms side by side before you decide.
Step 3: Get Your Documents Ready
Every registered lender in South Africa has to check that you can afford the loan before approving it. It’s a legal requirement called an affordability assessment, and it protects you from being given credit you can’t repay. Having your paperwork ready makes this part quicker.
Most lenders will ask for:
- Your South African ID number.
- Proof of income, usually your latest payslips or three months of bank statements. If you’re self-employed, bank statements or financial statements showing regular money coming in.
- Your banking details, so the money can be paid into your account and repayments can be collected.
- A rough idea of your monthly expenses: rent, transport, groceries, school fees and any other debt you’re paying off.
Be honest about your expenses
It can feel like leaving out a store account will improve your chances, but lenders also check your credit report, and a loan you can’t keep up with will cost you far more in the long run than a “no” today.
Step 4: Apply Online, Once
When people need short-term cash loans in a hurry, some apply with five different lenders in one afternoon, hoping one will say yes. Every application can show up as an enquiry on your credit report, and lots of enquiries in a short time can make lenders more cautious.
With EzyFund you fill in one short online form. It takes a few minutes, and we match your application with NCR-registered lenders, so you don’t have to repeat yourself on every lender’s website.
The lender then runs its own checks and makes the final decision on whether to approve you and on what terms.
Using our service costs you nothing. We may receive a fee from a lender if you take out a loan after we introduce you, but that never changes the price the lender is allowed to charge you.
A quick word on timing. Some lenders can pay out on the same day once a loan is approved and the agreement is signed, while others take a little longer. It depends on the lender, the time of day you apply and your bank.
Be wary of anyone who promises “instant money” before they’ve even looked at your application.
Step 5: Read The Agreement, Then Plan Your Repayments
If a lender approves you, you’ll get a pre-agreement statement and quotation, followed by the loan agreement. Don’t skim it on your phone while the kettle boils.
Check these things before you sign:
- The amount you’re borrowing and the total amount you’ll repay.
- The interest rate, initiation fee and service fee, and whether they match what you were quoted.
- The repayment date or dates, and how the money will be collected (usually a debit order on payday).
- What happens if you pay late, including any default charges.
If something doesn’t match or you don’t understand a clause, ask the lender before you sign. You’re allowed to take your time.
Once the money is in your account, put the repayment date in your phone straight away. Make sure there’s enough money in your account on that day, because a bounced debit order can add bank charges and lender fees, and it’ll show on your credit record.
If you can see trouble coming, phone the lender before the due date. Most would rather agree on a plan than chase a missed payment.
Red Flags To Watch Out For
Loan scams are common in South Africa, and they often target people looking for short-term cash loans who are already under pressure. Walk away if anyone:
- asks you to pay a fee before the loan is paid out;
- promises guaranteed approval or “no credit checks”;
- only communicates on WhatsApp and has no physical address you can verify;
- asks for your bank card, PIN or ID book;
- pushes you to decide or pay today.
You can check whether a lender is registered on the National Credit Regulator’s website by searching for its name or NCR number. If the details on the register don’t match the person contacting you, don’t go ahead.
When Short-Term Cash Loans Aren’t The Right Move
Short-term cash loans work best for a one-off expense that you can repay from your next salary or two. It’s a poor fit if you’re borrowing to pay off other debt, or if this is the third month in a row that you’re short.
In that case the loan only moves the problem to next month, and adds fees along the way.
If your debt has become hard to manage, speak to a registered debt counsellor. You can find one through the National Credit Regulator.
You’re also entitled to a free credit report once a year from each of the main credit bureaus, which is a good way to see where you stand. Our responsible lending page has a quick affordability check you can do first.
Short-Term Cash Loans: The Short Version
Borrow only what you need. Check the full cost first, and remember the legal maximum on a R3,000 one-month loan is R3,638.75. Have your payslips or bank statements ready.
Apply once, through a service that works with registered lenders. Read every line of the agreement before you sign, and plan your repayment the day the money arrives.
If you’re ready, you can check your numbers on our loans calculator or start your application. It takes a few minutes, and there’s no obligation to accept a loan offer.
