Some financial situations need you to think and act fast. You might not have the time to apply for a loan and wait 48 hours for the bank’s approval and funds to reflect in your account. If you are out of fuel but need to get to work in no time, a Loan Shark might just be your best bet.
If you have a sick child with no medical aid and you really need to take them to the doctor for some medical attention, you do not have the time to borrow from traditional lenders. The lady next door who is a Loan Shark will help you out of your situation. Remember, not all of us have access to instant loans during rainy days.
Thanks to our mobile phones and the internet, you no longer have to go directly to the Loan Shark and collect hard cash. You can easily just hit them up on their phones and they will do an instant money transfer, meaning you can take care of all your cash emergencies as soon as the funds become available to you.
What are Loan Sharks?
But let us talk a little more about what exactly a Loan Shark is. The term “loan shark” refers to loan providers without a license number. They are not legitimate loan providers. They charge exorbitant interest rates on their loans. Loan sharks make large-scale loans with the goal of quickly gaining prime interest. The majority of the time, they go after poor, helpless families who lack the financial resources to meet their needs.
Characteristics of Loan Sharks
Loan sharks should not be taken lightly because they do not follow microlending regulations. When you submit an application, keep the following in mind if you are unclear about the loan requirements. The loans may not exceed R10,000; they must be repaid in full within 36 months, and they cannot be repaid with other types of borrowing.
How to Identify Loan Sharks
It’s crucial to spot a loan shark before taking out any kind of loan. This makes it possible for you to avoid falling prey to their tricks.
- Typically, they provide little to no paperwork, such as a credit agreement or payment record.
- They frequently refuse to provide details such as interest rates or balances owed.
- They require collateral for the loans they offer to you, such as your passport, bank cards, or driver’s license.
- Your loan’s amount has increased, or new fees have been added.
- Typically, they won’t let you pay off your loan.
- They frequently turn to intimidating, threatening, and extorting their victims.
- They extend you a loan without examining your present earnings.
- Their company lacks a legitimate website or physical address.
- This lender lacks a license number.
- They impose interest rates substantially above the market rate.
How to Find Loan Sharks
They can be located online, through personal networks, or in underbanked neighbourhoods. They frequently receive their funding from mysterious sources and work for unregistered or personal businesses. A credit or background check is not necessary for a loan shark.
Ways to Identify Legitimate Lenders
- Determine whether they adhere to the National Credit Act (NCA) of South Africa’s rules.
- If they failed to indicate that the lender has valid authorisation to lend money, they are not legitimate.
- Verify their contact details. You must have their contact information, including phone number, email address, and physical addresses. Even if it’s a lender that only conducts business online, all the information above should be easily accessible on their website.
- Monitor internet testimonials for their loans.
- Discover whether the lender is registered.
Alternatives to Loan Sharks
According to the NCA, all lenders who offer credit must register with the National Credit Regulator (NCR) and prominently display their registration documents in their places of business. The credit provider’s registration number, denoted by the letters “NCRCP,” which may be used to file complaints with the NCR, must be included in the registration certificate.
If a credit provider cannot give you their NCRCP number or does not have their registration certificate on display, it is likely that they are not registered. Any credit contract made with an unregistered credit provider (like a loan shark) is illegal and cannot be upheld in court. You can find all loan shark alternatives and registered credit providers on the NCR website.