As an individual who is in search of a debt review loan, you will always feel like you are in a trap, especially when you are trying to make multiple repayments, interest charges, and calls from creditors.Â
Many South African individuals are currently turning to debt review loans as a way to regain financial control before completely clearing their debt.Â
In this content, a review is offered to provide detailed information about debt review loans, including how they work, who qualifies, the benefits and drawbacks, and expert tips to help you decide if this is the right step for your financial recovery.
Read Also:Â How To Get Off Debt Review: A Complete Guide
What Is A Debt Review Loan?
A debt review loan is a type of personal loan or consolidation loan designed specifically for individuals undergoing or recently discharged from debt review.Â
Debt review is a legal process in South Africa introduced by the National Credit Act to help over-indebted consumers manage and repay their debts.
When you are under debt review, a debt counsellor restructures your debt payments to make them more affordable.Â
However, many people still need a lump sum for urgent needs. This is where debt review loans come into play.Â
Why Debt Review Loans Are TrendingÂ
Inflation and interest rates are the main reasons why South Africans are seeking debt review loans. One major reason I will be giving details about here is the Tighter Lending Rules.
Now, banks are cautious, and the rules for debt review loans are becoming tighter. Although specialised lenders are stepping in with proper debt review loan products.
The two ways this debt review loans can be granted are if there is financial education, which is when more consumers understand their credit rights and seek legitimate ways to fix their credit.
Finally, digital access. This is when online applications and credit checks make it easier to apply for debt review loans in minutes.
Can I Get A loan While Under Debt Review?
No, traditional lenders will not offer credit while you are still under debt review. However, some lenders partner with debt counsellors to offer consolidation loans as part of a structured repayment plan.Â
These lenders are sometimes not fully registered. They are loan sharks that will offer you a loan with outrageous repayment terms and interest.Â
Who Can Qualify For A Debt Review Loan?
Not everyone qualifies for a loan while under debt review, and approvals depend on the lender’s criteria. Below are the four typical qualifications.
The first one is that you are under or have completed debt review. Secondly, you have a stable income (being paid a salary or being self-employed). Thirdly, you can afford the new loan repayments, and lastly, you can demonstrate responsible financial behaviour.
Also, some lenders in South Africa may also look at how long you have been under debt review and your credit score trends before guaranteeing a loan to you.
How Debt Review Loans Work
There’s no magic to how debt review loans work, but it’s how the lender assesses you. The lender reviews your financial situation and your debt review status.
The process by which you get a loan as an individual in South Africa consists of three steps, and they are stated below.
1. The first step is the loan offer. If your loan is approved, you will be offered a loan to consolidate or settle existing debt.
2. Secondly, disbursement starts. Now, funds are paid to your creditors or into your account, depending on the agreement you made with the lenders.
3. The last step is the new repayment. You now pay back the loan in fixed monthly instalments, ideally at a lower rate or longer term, depending on the agreement you signed with the lenders.
As an individual looking for a debt review loan, it’s important to note that these loans do not cancel debt review status automatically unless you are formally discharged.
What Happens If I Stop Paying My Debt Review Loan?
You will face legal action, added interest, and a negative impact on your credit score. Missing payments on a debt review loan can cause these serious problems.
If you are struggling to repay on time or are behind schedule, speak to your lender immediately for renegotiation options to avoid the above actions.
Frequently Asked Questions (FAQs)
1. How do I know If A Debt Review Loan Provider is legitimate?
Make sure the lender is registered with the National Credit Regulator (NCR). Avoid any provider that demands upfront payment or does not require formal documentation. Check online reviews and ask for their NCR registration number.
2. Can a debt review loan help me get out of debt review?
Yes, in some cases. If the loan is large enough to settle all outstanding debts, and you can show proof of full repayment, your debt counsellor can issue a clearance certificate. This marks the end of your debt review process.
3. Are There Debt Review Loan Options With No Credit Check?
No, it’s unlikely to get approved for a full debt review loan without any credit review. However, some lenders offer loans with soft credit checks. However, your debt repayment behaviour can be more important than your credit score in some cases.
ConclusionÂ
Debt review loans are a powerful tool for South Africans looking to consolidate or clear debt after going through debt review.Â
Despite not being a magic fix, when used correctly, they can help you regain control of your finances and work towards a debt-free life.
It is advisable to always approach debt review loans with caution, use reputable lenders, understand the legal rules, and never borrow more than you can repay.
