When most people find they need a cash loan, it is often because they have encountered a financial emergency. It might be the receipt of a totally unexpected bill, or it could be something like their car breaking down and needing a costly repair.

If you can somehow avoid taking out a loan altogether, you should do so. The best thing to do is to put money aside into some kind of savings account on a weekly or monthly basis. The interest rates on the majority of savings account are not that great, but if the money you have set aside means not having to take out a loan, you can avoid having to pay out significant amounts of loan interest.

16-million South Africans have money in savings accounts

Although South Africa is often is often tagged as being one of the worst countries in the world when it comes down to the population’s financial awareness, over 16% of South Africans have money set aside into some type of savings account.

However, the SA Reserve Bank has estimated that somewhere around 42% of these savers have put their cash into accounts that offer poor interest rates, many as low as 1%.

If you are one of the South Africans who are fortunate, or savvy enough have disposable income that you could put into a savings account for a rainy day, you might like to check out the website. They’ve developed an algorithm that allows potential savers to check out the best savings account depending on your individual circumstances.

The truth about instant loan providers

Of course, the majority of South Africans are not in the position of having any disposable income. All their cash is tied up in living expenses and they get by on a day to day basis. It’s these folks who may need quick cash loans when something goes wrong. If you fall into this category, you do however need to be careful about the companies offering so-called instant cash loans.

When you find yourself backed into a corner, and the only way out is to get a loan, don’t rush out and get the first quick loan you come across. If you do see someone offering instant loans – beware. There is no such thing – at least not from a legal, regulated finance company.

A few minutes of research could save you a considerable amount of money – especially if you fall foul of the so-called loan-sharks or mashonisas.

There are an estimated 40,000 loan-sharks operating in South Africa according to one report, and they account for 1 out of every 100 short terms loams that are agreed. Luckily, these sharks are relatively easy to spot because they are not regulated by the NCR. This is the first thing to check when you are doing your research.

Look before you leap

When you do find a loan provider you think you might want to use, the next thing to check out is what terms they offer. Many quick loan merchants don’t provide much by way of choice of repayment periods. But it’s important to pick a period that best suits your needs.

If for example, you take the loan out for a short period, you may find yourself struggling to make the repayments. Yes, you’ll pay less in terms of interest, but what good is that if you can’t make the payment or you are forced to take out another loan to get by?

It may make better financial sense from your own cash flow point of view to take the loan out over a longer term. Okay, you will pay more interest, but the longer duration may mean less of a strain on your personal finances. In other words, find a loan provider that gives you the options and pick the one that suits you best. Look before you leap.