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Here’s Everything You Need to Know to Compare Loans Like a Pro

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In a nutshell

  • What to look for when comparing loans online? 
  • Which type of loan suits your needs best? 
  • Examine your budget before applying for an online loan.

In South Africa, there are hundreds of payday loan lenders; with each offering a different deal, regulated by the National Credit Regulator (NCR).

Now, that’s a good thing, as you have several payday loans options to choose from. You have more control. The downside though, is that the diversity of lenders could overwhelm you. Plus, how do you know which lender is right for you?

Here’s where knowing what to look out for in a short-term loan comes in. With the knowledge, you can compare different loan options and choose the one that is a good fit for you. You risk paying more in interest rates when you go-ahead to take a payday loan online without first, comparing between offers from lenders.

In this piece, we shared everything you need to know to compare payday loan online. You’ll learn about all the information you need to score the cheapest deal for yourself.

So, if you’re ready, let’s dig in:

3 Most-Important Things to Look out for When Comparing Payday Loans

When you apply for a payday loan, three major factors play crucial roles in how much you will end up paying. They are:

  • Overall loan expense
  • Annual percentage rate (APR)
  • Repayment terms

Overall loan expense

This includes the interest rate plus the upfront charges and fees you pay for taking out the payday loan. First, understand that every loan, regardless of whether it is short-term or long term, has charges associated with them. So, it’s not out of place to pay extra fees for the loan. However, your focus should be whether the lender is transparent. Did the lender fully disclose all the fees and charges that come with the loan? Or were there some hidden charges tucked away in fine prints? Depending on the lender, you may come across such terms like upfront charges, origination fees, administration, appraisal, processing, and or credit report fees. Try to avoid these charges by comparing offers from different lenders.

Interest rate is the additional money you pay besides the loan amount. Every loan comes with interest, except, of course, interest-free loans. Interest rates are controlled by each lender, which means you will find that the rates vary from one lender to the other. So, you may want to shop around for the lowest rates available.

To set an interest rate, a lender will have to consider a couple of factors which include:

  • Loan amount – The total amount you applied for determines how much interest you get to pay on loan.

Take, for example, you will pay a smaller amount in interest when you apply for a £100 loan compared to if you had applied for a £1000 loan.

  • Repayment term – If the loan is spread across several months, you will end up paying more in interest and service fees compared to if you are paying back the loan in one month.

Before you settle for any offer from payday loan lenders compare the overall loan expenses or “total amount repayable,” you will pay for the loan. Total amount repayable is the most precise metric that shows you the exact pound amount you will pay for the loan.

Annual percentage rate (APR)

You would probably think APR isn’t a very important factor for short-term loans since most payday loans have short repayment terms of a couple of weeks to a few months but that is not true. Even though APR is measured on a yearly basis, it still applies to short-term loans.

APR gives you the total of cost of the loan in percentage, including all fees charged by the lender. APR is explicitly designed to allow consumers to compare payday loans and different types of loans.

Repayment terms

Before you ever apply for a payday loan online, decide the exact amount you want to borrow. Then, choose how long you intend to carry the loan. Though, for Payday loans you usually have between one day to 6 months to repay the loan – so you may not have many options here. Keep in mind also, that payday loans are usually repaid in a one lump sum at the end of the expiration of term, often within 28 days.

With these in mind, you may want to shop around to compare what different lenders are charging for your term. Also, be sure there are no penalties for early repayment.

What are other types of unsecured loans available?

Aside from Payday loans, there are other several unsecured loan options open to you.

Below we looked at some of the loans available in the South African market:

Payday loans

Payday loans are a type of unsecured loan you take to tide you over a month until your next paycheck. You usually pay back the loan within a month. When applying for the loan, NCR states that credit providers are obligated to conduct proper affordability assessments before granting credit.

It is worth bearing in mind that the interest rates for this type of loan are high because they don’t require any collateral. Before you take out the loan, be sure you can meet your repayment obligations on time, as late or missed payment charges could stack up real fast, making the loan even more expensive.

Short-term loans 

Short term loans are loans that are paid back within a short time. They are designed for those who cannot repay a loan in one go. Or if you’re in a financial pinch and need quick cash to tide you over till next paycheck. Repayment for short term loans are typically spread across several months, depending on the repayment terms, could be between three to six months. Hence, you are required to make small installments each month until the loan plus interest are paid back in full.

Keep in mind, though, the longer it takes to pay back the loan, the more interest you accumulate on top the initial loan amount.

Personal loans

Personal loans are another type of unsecured loan you can take in South Africa. Usually, personal loans have interest rates on 3-30%. And, repayment often happens in a lump sum over 1-7 years. You can consolidate different personal loans into one with the hope to reduce your monthly repayment costs; though, this might mean extending repayment time.

However, you can over-pay on your monthly installment, pay off your personal loan in full or in part without running the risk of any penalties.

Cash loans

Cash loans or cash advance loans are short-term loans which enable people to borrow cash quickly for emergencies. If you have a sudden, unplanned event such as emergency dental care, or a car repair, cash loans can come in handy.

An upside to this type of loan is that they are easy to receive. After filling out the loan request form and your application got approved. The cash will be deposited straight into your checking account.

Cash loans are suitable for people with new or bad credit history. However, only request for the amount you need to avoid paying higher interest. And, remember to use cash loans for short stop-gap for emergencies only. They are not suitable for long term borrowing or as a solution for your financial difficulties.

Personal financial health check before applying for a loan

It has become incredibly easy to borrow money – with just a swipe or tap on a screen, you can receive cash from lenders. The danger, however, is that it has also become a lot easier to fall into financial difficulty too. Here’s where responsible borrowing comes in:

First, borrow only the amount you need. This way, you avoid the extra interests that come with a more substantial loan amount.

Secondly, determine how much you can comfortably repay in a month and shop around for lenders that will offer you those terms. You don’t want to be caught in the vicious cycle of borrowing to tide you every month.

Finally, ensure to pay off your payday loans as quickly as you can. Draw a monthly budget and strive to stick to it.

So, there you have it. Payday loans and other short-term loans are quick financial solutions you can leverage to sort out emergencies and other unexpected events. However, they are not appropriate for long term borrowing. And, when you need to use payday loans, be sure to compare loans from different lenders for the best possible deals.

All you need to know before getting a payday loan online

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Did you know...


Payday loans make up 67% of the volume of credit agreements in the 25-39 age group . Source: DebtBusters

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