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How to get a loan under debt review? This is a common question asked by many South Africans.
No, legitimate and responsible lenders in South Africa do NOT offer loans under debt review. If you’re under debt review you have to exit the debt review process first.
You should be able to qualify for a loan once the debt review flag has been removed from your credit profile. Be sure to pay off your existing debt on time to improve your credit score.
In the future, it’s best to only borrow what you can afford to avoid worsening your financial situation.
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Debt Review: What Does It Mean?
It’s good to know what debt review means to better understand the topic of loans under debt review. In short, debt review, also known as debt counselling, is a legal process where you get professional help because you can no longer repay your loans.
This process involves the courts. When you apply for debt review, you get a new payment plan with smaller instalments. That way, you can still afford your debt payments and monthly cost of living.
You will have a debt counsellor to guide you through the process and negotiate with your lenders. Remember, the new payment plan is enforced by court order, so it’s important to stick to it as much as possible.
Once you become a debt review client, this information is reported to the South African credit bureaus. As a result, the record goes into your credit file and will be visible if the lender performs a credit check.
Is It Possible to Get a Loan Under Debt Review?
When you’re a debt review client, you can’t stop the process once it starts. The only way to get debt review removal is to finish paying back your debts. During this process, you may need some extra cash.
This is tricky because taking out new loans under debt review can worsen your financial situation. According to DebtBusters, many South Africans have financial stress.
A 2022 survey shows that the average loan size has increased by 28% over the last few years. Without rules or regulations, it’s easy to keep borrowing and borrowing.
That’s why the National Credit Regulator (NCR) and the National Credit Act (NCA) exist. They ensure responsible lending and borrowing. As a borrower, it’s your responsibility only to borrow what you can afford.
If you’re under debt review, you have already shown that you’re struggling to pay. That’s why the NCA says you can only take out new loans when you finish your debt repayments.
However, if you desperately need cash, there are South African private lenders that can help. The good news is that these lenders look at other factors besides your debt review status.
For example, they want to know if you can afford it. That’s why they ask for the three latest payslips and bank statements. If you can provide these documents, it’s possible to qualify for loans under debt review.
However, it’s important to emphasize that getting loans under debt review is extremely difficult.
I Was Promised a Loan While Under Debt Review – Should I Take It?
You’ll find many lenders promising loans under debt review online.
Here are a few examples of such offers:
- Are you struggling to get a loan because you have been blacklisted or are under debt review? No worries! We can help you. Apply today.
- You can apply for a loan and be approved even with a debt review or court order—no credit check. You can even qualify without a payslip! Requirements include a copy of your ID and three months’ bank statement.
There are also many posts advertising and promising Gumtree loans under debt review. These loans can make life easier if you need cash badly.
But it would be best to avoid high interest rates that make the loan difficult to repay. These types of loans are usually offered by loan sharks who take advantage of your desperation.
For instance, some micro-lenders will hold onto your ID, bank card, PIN, and other important documents until they collect.
Then, they’ll access your bank account and sensitive information to enforce the debt. So, even if you’re under debt review, you should be careful about the loans you take out.
So, Where Can I Get a Loan Under Debt Review?
After entering the debt review process, you may still need somewhere to get extra cash. Here’s a list of similar questions from South Africans like you looking for loans under debt counselling:
- Can I get a loan under debt review?
- How do I get a loan under debt review?
- Can you apply for a loan while under debt review?
- Can a person under debt review get a loan?
If you have the same question(s), the good news is that you can find some helpful answers.
While getting loans under debt review is not wise, sometimes you have no choice. In that case, consider the following options.
Ask Family and Friends
Do you have people in your life that can help? That’s always a good place to start. You should also consider asking your employer for a loan or salary advance with a flexible payment plan.
However, make sure you only borrow what you can afford. In addition, don’t make promises you can’t keep.
Find a Side Hustle
Cash is king because at least you’re spending money that belongs to you with no strings attached. So, it helps to look for a side hustle while you’re under debt review.
This can help you make ends meet and prevent you from increasing your debt. Examples of side hustles in South Africa include becoming a social media influencer, writer, or delivery driver for Uber.
Get a Loan From a Private Lender
A private lender is a company that lends money to people who have difficulty getting loans. These are usually smaller companies compared to traditional banks and credit unions.
You’re more likely to get loans under debt review without a credit check from a private lender because they consider your income.
As long as you can provide payslips or bank statements, you can qualify. The important thing is to have enough income every month.
You must also agree to a debit order, so the money is deducted from your bank account when the payment due date arrives.
Get a Payday Loan
A payday loan can help if you’re under debt review but need money urgently. This is a short-term loan you must pay back as soon as your next payday comes.
The lender may not carry out a credit check, but they will likely ask for your payslip and bank statements for the past three months.
The lender usually deducts the money from your bank account via direct debit. Again make sure you borrow only what you can afford. Payday loans have high interest rates, so they may be difficult to pay back if you take out a large amount.
Go to a Pawn Shop
You’re probably aware of Pawn Shops like Cash Crusaders. If you have an asset or valuable item like a big screen TV or a fridge, you can take it to a Pawn Shop and exchange money for it.
For example, let’s say you have a new 48-inch HiSense TV you bought for R3500.
A pawn shop might give you R1200 for it. Then, they will sell it for R2500 and make a profit if you don’t pay the money back.
Find a Car Title Loan
Are you the proud owner of a car? You can also take your vehicle to a lender and exchange it for cash. But, again, you’ll risk losing your vehicle if you fail to pay, which is a big loss.
Hence, it’s better to consider other options. If there’re no other option, the next best thing is to borrow only small amounts that are easy to repay.
How Long Do I Have to Wait for Debt Review Removal?
Going under debt review and needing a loan can be challenging. You have to be patient until the long-term process is over.
How long debt review removal takes depends on how much debt you have, the interest rates, and how much you pay every month.
If you’re doing things slowly, the debt review process can take three to five years. In that time, you should work on reducing expenses, living within your means, and looking for ways to increase your income.
These are the best things anyone can do to get rid of debt.
Under Debt Review and Blacklisted: What’s the Difference?
Debt counselling and blacklisting are not the same things. Debt review is a more serious situation compared to being blacklisted.
When you’re blacklisted, it only means you have some negative information on your credit file. This can make getting approved for new loans difficult, but the situation is easier to correct.
For instance, you can make things better by paying off existing debt and making payments on time. This positive information also goes on your credit file, helping to improve your credit score.
Debt counselling is different because it’s a legal process that you have to follow no matter what. It involves paying back what you owe according to the new payment plan, which the courts will enforce.
Credit bureaus will remove the information from your permanent credit record when you complete the debt review process. Once you’re no longer a debt review client, it becomes easier to apply for new loans.
Sources:
News24 – Can I get a loan while under debt review?
UPSspace – Termination of debt review
Our Research Expert
Gracie Makowe is a full-time personal finance writer with 10 years of experience and a Bachelor of Commerce in Financial Management from UNISA. Learn more.