Loans (SA)

Loans for low-income: is it a good choice?

Check out the list of loans for low-income earners and learn if it is a good choice to apply for a credit solution if you don’t earn a high monthly income.

by Aline Augusto

Published on 02/26/2023

Loans for low-income earners: credit solutions with affordability

Should you get a loan with a low income? Source: Canva.
Should you get a loan with a low income? Source: Canva.

Unexpected situations may happen to everyone, no matter if you earn a high or low income. But if you have a low income, you’ll find it hard to access some loans that could help you solve it.

The main difference is that usually, people who earn a high income have enough assets to fund an emergency.

In contrast, low-income earners may find themselves on a dead-end street when a surprise appears on their way.

Of course, the best move would be to work on an emergency reserve to fund whatever you need, especially if it is an unplanned situation.

However, it is pretty difficult to save money when what you earn pays the least. 

Therefore, financial institutions may help you with that. Many offer credit solutions for low-income earners. But, you need to be careful not to fall into risky deals and end up with a large debt.

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How to choose the best loan if you earn low income?

In the first place, it is crucial to face your finances. Then, if you earn a low income, you better plan how to access credit and how to pay it back in a responsible way.

In case you are able to afford loan repayments, it is time to go after reliable, affordable, and flexible lenders.

Generally, banks offer good loan agreements. Also, it is essential to mention that it is only worthwhile to go after credit providers that commit to National Credit Act.

In summary, lenders that commit to that only provide a loan that a client can afford to pay back. This is called affordability.

Thus, it is only a good choice to apply for a loan after getting a loan agreement that fits your budget, especially if you are a low-income earner.

In second place, it is important to consider that all credit solutions come with fees and interest. Although the terms and conditions may be flexible, estimating how much you will be engaging for the next years is essential.

Is it a good choice to apply for a loan?

Make sure you can repay the loan before you apply for it. Source: Canva.
Make sure you can repay the loan before you apply for it. Source: Canva.

Applying for a loan comes with a list of pros and cons, along with responsibility, especially if you don’t earn much money as income.

So, you need to address the risks and benefits before deciding to go through with an application. 

Shortly, is it a good choice to get a loan if you are a low-income earner? It depends. Firstly, you need to face your finances, as mentioned above.

Then, you must check if you can afford the repayments and if the conditions are reasonable.

Of course, it is important to consider the reason why you would apply for a loan. A loan can be the only alternative available if you don’t have an emergency reserve and don’t have another way out to cover an unexpected expense.

In this case, searching for a good loan deal is an excellent path you should take.

Which credit providers accept low-income earners applicants for its loans?

See which lenders accept people with low income. Source: Canva.
See which lenders accept people with low income. Source: Canva.

Some banks offer great deals on lending options for low-income earners. But, before applying, estimate your loan to check if it would suit your monthly finances.

1. Absa Personal Loans

Absa offers loans of up to R350,000 with flexible terms of up to 84 months. Also, it guarantees the lowest interest rate on the market.

Basically, if you get a more affordable offer, Absa can beat it. However, read the conditions brochure before applying.

Additionally, Absa accepts low-income earners as follows:

  • For a personal loan for over 12 months, you must earn a regular monthly income of at least R2,000;
  • For a personal loan of up to six months, you must earn a minimum of R1,500 monthly income.

This bank also protects you if something unfortunate happens through a Credit Protection Plan.

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How to apply for the Absa Personal Loan?

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2. Nedbank Personal Loans

On the other hand, Nedbank accepts applicants who earn at least R5,000 as regular monthly income.

To sum up, you can borrow from R2,000 to R300,000 with terms of up to six years.

Moreover, you can bundle your loan with a Savvy Plus or Savvy Bundle Account to earn R200 cash back every month!

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How to apply for the Nedbank Personal Loans?

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3. Standard Bank Personal Loans

Now, if you earn at least R3,000 as a monthly income, you can apply for a Standard Bank Personal Loan. 

Standard Bank offers loans of up to R300,000 with fixed repayments in up to 72 months, even for those with a low income.

In addition, interest rates are personalized, and you can earn points if you manage to pay your loan installments responsibly. 

4. WesBank Personal Loans

Finally, if you need up to R300,000 with rates as low as 18.25%, WesBank can be your option.

The loans can be paid in up to six years with a Customer Protection Plan for your convenience and security.

Furthermore, the repayments are fixed, and you can apply online as well as estimate your loan with a calculator available on the official website.

WesBank accepts applicants earning at least R5,000 as a regular monthly income.

Recommendation: 3 best low-income cards in South Africa

As can be seen, loans can be a way out for those who have a low income but need to fund a project or even cover an unplanned expense.

However, it is worth applying if you can afford the terms and conditions to repay responsibly.

Another credit alternative low-income earners can rely on to cover smaller daily expenses is the credit card.

Even though you still need to be careful about applying for a credit card, some good options exist for low-income earners in South Africa.

So, take a look at how to choose your next card designed for those who don’t earn much!

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3 best low-income cards in South Africa

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About the author

Aline Augusto

My name is Aline Mesquita; I'm a writer here on the blog, where I write about finance in general and other subjects. I have been working with content creation for ten years. Also, I'm post-graduated in Project Management, with expertise in SEO practices. Currently, I am studying finance, market trends, and cryptocurrencies.

Reviewed by

Aline Barbosa

Senior Editor

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