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Dealing with loan sharks (Mashonisa)

ANC funding within the economy
Money/ YouTube screenshot

By: Poelano Malema

People don’t always have money when they need it and can turn to loan sharks for help.

Sometimes desperation for money can make one end up making deals with loan sharks without checking if the loan provider is legit.

Many don’t even know the terms and conditions of the loan.

According to a 2018 study by Wonga, informal cash lenders possibly affect up to 1 in 100 households in South Africa.

Jeffery Sibanda, a Financial Advisor in Gauteng, says it is very important for people to check with the NCR to see if a loan shark is registered.

Some ways of identifying an illegal money lender are if they lack an NCR license, they require items of security such as your identity document, bank card or driver’s license, they do not provide you with the appropriate paperwork such as the credit agreement or record of payments.

READ: Nedbank Homeloans 101

If a loan lender is illegal and unregulated, he/she can charge high-interest rates and make huge profits.

“By virtue of being unregulated they charge anything from 30% – 50%, registered lenders charge fees as prescribed by the National Credit Act,” says Sibanda.

Sibanda warns that another danger of entering into an agreement with an unregistered loan shark is that “being illegal or unregistered renders the loan agreement null and void.”

Go Legal website states that in terms of Section 89(2) of the NCA, a credit agreement is unlawful if they are concluded by an unregistered credit provider.

The website states that some of the consequences of unlawful credit can include:

  • The agreement to be declared void.
  • The consumer’s money is to be refunded.
  • The rights of the credit provider to recover funds from the consumer are to be cancelled.

READ: Thomas and Skhumba: Are you coping with your debts?

Loan sharks often use intimidating ways and threats to get their money back. They can even go as far as taking one’s personal belongings.

“Should you fail to repay the loan on time your personal belongings will be taken regardless of the value , most of the times valued more than the loan itself , intimidation and in some instances violence,” says Sibanda.

Sibanda says this is a criminal offense.

If you are a victim of a loan shark or know of any loan sharks, you can report them to NCR and the South African Police Service.

WATCH: Outrage over metro police destroying a Kasi business

Image courtesy of YouTube screenshot.

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