Loan Sharks – Guide for Borrowers
The reality is that the loan sharks of South Africa are no better than the predators which they are named after. These are unscrupulous lenders that charge extremely high interest rate and use other tricks to squeeze money out of their customers, who are usually people in a very difficult financial situation. Find out more about them and their practices so that you can avoid getting into their trap.
What They Are
The loan sharks in South Africa offer loans at super high interest, which exceeds the limit set by the National Credit Regulator (NCR). They typically charge high fees as well. They charge interest per day rather than per week or per month no matter how long the term of the loan is. They use a whole range of illegal practises which aim to make the cost of the loan huge.
These lenders try to trick their customers into believing that they have made a good deal. They typically do not provide a copy of the agreement to the borrowers. Sometimes, there isn't an agreement at all. These lenders use false advertising and even promote their products directly to individuals that may have financial difficulties like unemployed workers, pensioners and blacklisted people.
Loan sharks can go much further in their illegal practices. In some cases, they require borrowers to pass them the ownership deeds of vehicles and property that they own to serve as surety that they will repay their debt. There are also cases in which the lenders take the IDs of their clients. It is not uncommon for them to threaten borrowers who are unable to repay their debt.
How to Recognize Them
It is easy to recognize these lenders. They are illegal. They are not licensed by the NCR. Whenever you plan to deal with a lender, just ask for their license document or check with the NCR. The high interest rates and the fact that they have no requirements for loan applicants also give these illegal lenders away.
You can find plenty of top quality loans which are not offered by loan sharks South Africa. Just be watchful.