Published by The National Debt Review Center on
Last Updated on February 9, 2024 by The National Debt Review Center
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What is a mashonisa loan? What are the benefits of a mashonisa loan? Should you get one? If you’ve been struggling with any of these questions, don’t worry. In this article, we’ll answer for you everything you need to know about mashonisa loans, so that you can make an informed decision.
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Looking for Mashonisa Loans? Here are 12 Important Things You Should Know
What is a mashonisa loan?
Anyone who lends money to people in his or her community but is not a registered lender with the National Credit Regulator is referred to as a mashonisa. A mashonisa is essentially anyone in your community who is willing to lend money to people in need.
These loans are typically of a month’s duration or less. They can cost as little as R50 or as much as R5,000 or more.
Because of their informal nature, a mashonisa’s trustworthiness is always a gamble. Mashonisas are in charge of their own fees and interest rates.
Purpose of a mashonisa loan
Mashonisa loans are a type of loan that is typically used for individuals in South Africa. The purpose of a mashonisa loan is to provide the borrower with quick capital to help them when they are in need of extra financial assistance to cover unexpected expenses, while others may use a loan for other reasons.
What are the Benefits of a Mashonisa Loan?
A few factors contribute to the popularity of mashonisas in South Africa:
- Convenience. Borrowing money from a neighbor is more convenient than going to a lender’s office.
- Speed: these loans are nearly always instantaneous.
- There are no credit checks: Mashonisas are less concerned with your credit score as long as you can repay the loan.
- Simplicity: Going to a mashonisa is less complicated than dealing with lengthy application processes.
- The interest rate is fixed: Despite being high, the interest rate does not vary with the amount borrowed.
What are the Disadvantages of a Mashonisa Loan?
Unsurprisingly, mashonisas are not always well-known. Many people regard them as dishonest loan sharks.
In any case, their lack of regulation is a legitimate source of concern. It means they can charge whatever interest rate they want, up to 50% in some cases.
Because there is no NCR oversight, mashonisas are free to charge hidden fees and penalties. A mashonisa, for example, may charge a fee if a loan is repaid early.
Criminal activity is also a possibility. According to independent investigations, collection practices can include intimidation, social shaming, and asset seizure.
Why do people borrow money from Mashonisa?
There are a number of reasons why people may choose to borrow money from Mashonisa. Some people may need extra financial assistance to cover unexpected expenses, while others may use a loan for other reasons. Whatever the reason, it’s important to understand the terms and conditions of a Mashonisa loan before borrowing.
We have been receiving numerous complaints from consumers as illegal money lenders, or mashonisas, operate across the country and use threats to collect payment. They keep the customer’s bankcards and ID books as collateral, and charge interest rates so high that the borrower will most likely never be able to pay the loan off.
A mashonisa will do everything they can to ensure their clients are never able to pay off the loan, but just keep paying that 50% interest each month. This means that they generate huge amounts of income and feel secure because they have complete power over you.
What to do if a mashonisa is after you?
Any lender, registered with the NCR or not registered, who harasses you is breaking the law. You shouldreport any loan shark to The National Credit Regulator and to the police if the loan shark threatens you or uses violence.
If you wish to lodge a formal complaint to the NCR, you need to complete Form 29. This is available on the website ncr.org.za You can also get one by emailing complaints@ncr.org.za or by calling 0115542700.
In the form, you will need to include your details as well as information relating to the loan shark. The regulator will respond within 10 business days. If you have not received a response within that time frame, you need to escalate the issue by contacting the call centre.
