Due to the present financial pressure, you could be tempted to take out loans from the formal or informal sector, but please be very careful. The long term effects of lending money are far-reaching and very costly.
Informal money lenders are alive and well in our credit landscape in South Africa. Their no-holds-barred loan sharking will probably remain around forever, as long as there are customers.
But, be aware:
- They prey on the more vulnerable people in our country, offering help to lift financial burdens, but in the long run these loans place huge stress and pressure on families.
- Excessively high interest rates, ranging from between 30 – 50% interest, can be charged.
- Once in the money lending cycle, it becomes increasingly difficult to get out of it – so try to avoid this at all costs.
- If you want to lend money and charge interest, you must be a registered credit provider.
- Loan sharks are also known to harass you at your place of work or home, if you fail to repay the money as required.
- Consumers are advised to lodge a complaint with NCR (National Credit Regulator) on ncr.org.za
- If loan sharks are threatening you, report it to the police.