The need to urgently borrow money often leads people to making some risky decisions. Approaching loan sharks is one such decision. Many people do this when unexpected emergency expenses arise or if they have bad credit records and cannot qualify for loans from mainstream lending institutions.
What are loan sharks?
These are individuals or organisations that loan money to consumers without being licensed to perform this kind of commercial transaction.
How does this differ from ordinary people providing loans to family and friends?
Loaning family and friends money isn’t illegal. The problem arises if you decide to take this a step further by charging exorbitant amounts of interest to people who borrow from you and when you start bullying and physically threatening them in order to get them to pay you back. Another problem is if you resort to taking the personal belongings of the individuals who you money.
This is essentially the definition of a loan shark.
In South Africa, lending institutions are regulated by the National Credit Regulator. Loan sharks don’t adhere to regulations set out by the National Credit Act.
Their terms are unfair and interest charged is extremely high.
Agreements are usually verbal, and there is usually no documentation of the agreements.
The National Credit Act was introduced to South African consumers in order to facilitate access to information and to provide protection for the consumer’s rights in terms of credit agreements.
If you are in need of extra finance and you can’t get assistance from your bank, the NCA has made it possible for you to gain access to reputable lenders who adhere to rules and regulations of the NCR. Do the proper research to find solutions to meet your needs and this way you will avoid loan sharks in Soweto.