Most of us have or considered taking out a loan for various reasons such as buying a car, medical bills or even wanting to start a business and live more comfortably.
As we know loans are not ‘’free money’’ we still have to pay it back and with interest but one question that is recurring is where can I get a loan if I am under debt review in South Africa and is it possible?
I decided to do some in-depth research and hope this article will guide and help you regarding loans under debt review.
What is Debt Review?
Debt review is a process where a person who is struggling to manage their debts seeks help from a professional. These professionals review their financial situation, like how much money they owe and what they earn.
Then, they work with the person and their creditors to come up with a plan to repay the debts in a more manageable way. It often involves negotiating lower interest rates or extending the repayment time.
This helps the person to slowly pay off what they owe without getting overwhelmed by big payments. It’s like getting a structured plan to handle your debts and make things easier on your wallet.
Debt Review Disadvantages
- While under debt review, you usually can’t take on new loans. This can limit your financial flexibility if you need credit for emergencies or other purposes.
- Debt review can negatively affect your credit score. This might make it harder to get loans or favorable interest rates in the future.
- Debt review services often charge fees, which can add to your financial burden. These fees might vary based on the company you work with.
- Your spending might be restricted during debt review, as you’ll be following a strict budget to manage your repayments. This could impact your lifestyle choices.
- Not all types of debts can be included in debt review, such as secured loans (backed by collateral like a house or car) and certain other financial obligations.
- Creditors have to agree to the proposed repayment plan. If they don’t, the debt review process might not work as intended.
- Dealing with financial difficulties and the debt review process can be emotionally stressful, as it involves facing your financial challenges head-on.
- While debt review helps you manage your debts, it might not provide extensive financial education to prevent future financial problems.
Where Can I Get a Loan If I am Under Debt Review?
The short answer is that you cannot apply for a loan while your debt is being reviewed. This is because your credit profile will be flagged by all credit bureaus during this time, which will prevent responsible lenders from approving your loan application once they learn that you are currently overindebted.
However, there are certain ‘’places’ you can turn to if you need cash immediately such as pawnbrokers, loan sharks and private lenders although this is advised against.
The above should help understand what is a debt review but there’s more involved in this process which I will get to now.
How to Remove Debt Review Status
Ask your debt counselor for a clearing certificate, then give it to the credit bureau.
How to Get Out of Debt Review
Even if there is no court order in place for your debt review, you must file a court application for the court to decide that you are not over-indebted in order to end the debt review process and have the debt review notification removed from your credit reports.
Under Debt Review and Need a Loan Urgently
If you’re under debt review, it’s best to communicate with your debt review counselor first. They can provide you with guidance on whether it’s advisable to take on new debt and what impact it might have on your current situation. Before pursuing a loan, explore alternative options. Can you cut back on expenses or find ways to increase your income? It’s important to address the underlying financial issues that led to the need for a loan.
If possible, try to tap into any emergency funds you might have set aside. This can help you cover immediate expenses without adding more debt.
Some microfinance institutions offer smaller loans with less stringent requirements. However, be cautious of high interest rates.
Credit unions might be more willing to work with individuals in challenging financial situations.
If appropriate, you could ask friends or family members for a loan. Make sure to discuss repayment terms and expectations clearly.
Iemas Loans for Debt Review
Iemas offers a range of loan options, including personal loans, vehicle finance, home loans, and more. Their loans are typically used for various purposes, such as buying a car, home improvements, debt consolidation, and emergencies.
The question of where can I get a loan if I am under debt review should be put on a temporary hold for now.
If you are currently under debt review, it’s important to consider the implications of taking on additional debt. Debt review is a formal process aimed at helping individuals manage their debt and repayments more effectively. Taking on new debt during this process could impact your repayment plan and overall financial stability.
Wonga Loan under Debt Review
Wonga aimed to address the financial needs of individuals requiring quick access to funds. The company’s online lending model provided a convenient application process, catering to the urgent financial requirements of its customers.
Wonga faced criticism in South Africa for its high-interest rates and aggressive debt collection practices. The interest rates charged by Wonga were considered steep, raising concerns about the potential exploitation of vulnerable borrowers.
Wonga announced its decision to exit the South African market. This move reflected both the difficulties Wonga faced in complying with local regulations and the broader debates surrounding responsible lending practices in the payday loan industry.
In conclusion, seeking a loan while under debt review is a significant decision that requires careful consideration and understanding of the potential implications. While obtaining a loan might offer short-term relief, it’s crucial to weigh the advantages against the potential drawbacks.