SHORT-TERM LOANS IN BLOEMFONTEIN
The short term loan or micro-finance market landscape in Bloemfontein has changed quite dramatically over the past five to ten years due to some interesting influencing factors.
These include stricter regulations relating to the affordability of loan applicants, consumers making more educated decisions when obtaining loans, and loan providers behaving more responsibly when they grant them. Short Term Loans are a type of financing distinguished by quick repayment schedules, with maturation periods as short as 90 days. Loan repayment terms depend upon the amount borrowed but most short-term loans have shorter maturity dates than standard loans. Compared to standard loans with 30 year repayment schedules, Short Term Loans must be paid quickly, within a period ranging from 90 days to 15 years, depending on the loan. Although borrowers must pay off their Short Term loans quickly, there are notable benefits that make such loans worthwhile:
1. Short Term Loans can be obtained quickly and easily.
2. Short Term Loans can be used to pay off other business or personal debts.
3. Short Term Loans can be used to compensate for outside losses.
4. Short Term Loans can offer relief for cash deficits.
Short Term Loans also offer the obvious benefit of not indebting borrowers for lengthy periods of time. Short Term Loans extended to businesses are known as “short term business loans.” These loans are issued after evaluating the borrower’s credit history and the business’s ability to repay the loan. Each of these variables affects the loan’s interest rate, fees, and repayment date. Short-term business loans are typically used to pay off emergency financial liabilities. Generally speaking, Short Term Loans are best suited to unexpected circumstances and emergencies. If you decide to apply for a Short Term Loan, remember to use it sparingly and appropriately. Do not use Short Terms Loans in place of more appropriate long-term financial solutions, or you risk burdening yourself with debt. Finally, make sure the purpose of the loan is clear and that you have a realistic plan for paying it back. It is encouraging that the latest report from the NCR shows that in the first quarter of 2017 the percentage of credit in good standing was the highest it has been in four years. This tells us that the stricter regulations are working and that more consumers are repaying their loans.
In addition, the total number of Short Term loan transactions had reduced by 6.35% year-on-year as at March 2017, according to the Consumer Credit Market Report from
the NCR. This could mean that loan providers are lending more responsibly or that consumers are battling to get credit because they already have too much debt. It could also mean that 6.35% of the loans in the previous year should never have been granted in the first place. Another positive trend is that increased competition has driven the banks to lower their charges to the extent that it is now possible to open a basic saving account for R5 a month. Monthly banking fees have never been so low. The banks have also simplified their transaction processes and made it easier to open a bank account.
As a result, an increasing number of previously unbanked individuals are transacting with banks. The more responsibly consumers repay their loans the more their credit rating will improve and the more likely they are to qualify for more conventional forms of credit like a credit card. The most common reason consumers need a short term loan is cash flow problems due to unforeseen or seasonal expenses, which is often the same reasons why individuals, that have one, use a credit card. The average amount of our customers’ short term loans is R1,500 over three months.