Nomsa borrowed R6,000 from a loan shark to pay for her father's funeral. She ended up paying over R60,000 over 2.5 years in high interest payments. Loan sharks charge exorbitant interest rates, keeping borrowers trapped in endless debt. It is illegal for unregistered lenders to provide loans. Those who have borrowed from loan sharks should report them to the National Credit Regulator to file a complaint.

1. Beware of Loan
Sharks!
(Mashonisas)
Understanding Debt

3. First let me tell you a story…….
• Cape Town - A R6 000 loan from a loan
shark to pay for her father’s funeral
almost destroyed the life of a young
mother of two.
• Nomsa is now 42 years old and lives in
a basic 2-bedroomed house in
Khayelitsha with her two
children and a granddaughter.
Her husband is deceased.

4. • Four years ago when her elderly
father died after stroke complications,
she realised that no one else in the
family could or would contribute
towards his funeral costs. She also
didn’t have the money, so in
desperation she decided
to borrow R6 000 from a
township cash loan business.

5. Here is her shocking story
• No one had that kind of money and
we had to bury my father. I knew it
was dangerous, but I had absolutely
no choice. I had heard about this
particular business from a friend, who
had borrowed money there to pay for
her daughter’s funeral

6. • I signed lots of papers, and they
granted me the loan on the basis of
being a homeowner. There was lots of
small print and I was not given time to
read all 5 or 6 papers. . But one thing
it did say that I remember is that if
the loan is not paid back within two
years (with interest) it gives them the
right to sell my house.

7. • I signed, because I had no choice.
They only return the card once the
loan and all the interest is paid off.
• They took my ID book and asked for
my bank card and PIN. I fortunately
had no bank card, because I know
what happens is that they take
people’s cards and keep them for the
duration of the loan repayment time.

8. • They draw the money out of your
card that makes up your monthly loan
repayment, and give you whatever is
left over. I had to take them the
money every month as I did not have
a bank card. They kept my ID book for
two years.
• The did not tell me how much I would
have to pay back
each month or for
how long.

9. • Once I had returned from the Ciskei
where my father’s funeral had been, I
was given a piece of paper by them to
say that I owed them a total of
R13 580
. In the end I paid them R2 000 per
month for 2 years and six months.
• . When I confronted them about why
it was so much and why it carried on
and on, they told me that I had
missed a month, and therefore I had
to pay double for that month.

10. • I probably in the region of R60 000
altogether. I was afraid that they
would sell my house if I didn’t pay
them. When they sell your house,
they do not give you the difference
between what they sell it for and
what you owe them. . I was afraid to
make them angry. One of my friends
who stopped paying his installments,
was beaten up after they went
looking for him and lost most his
teeth. People are afraid of them, so
they carry on paying.

11. • I had to move out of my house and
move in with a friend, so that I could
let my house to generate an income. I
had no money for school fees, food or
transport. We were in a very bad place
financially.

12. Never Again!
• I would never do something like this
again even if I was desperate. I have a
job now, so I could apply for a loan at
the bank, where it costs much less to
borrow money. Or I would ask a
friend, but I would never go to the
loan sharks again.

13. Find another Way!
• Find any other way, but just don’t go
to these people. It’s so difficult to get
things back on track. I feel I wasted so
much money and it makes me sad.
People must be warned that it has
happened in the past that some loan
sharks use ID books of clients to open
accounts without their knowledge.

15. What is a Loan Shark?
• Loan sharks (mashonisas) are
illegal lenders who often target
low income and desperate
families. They might seem
friendly at first but borrowing
from them is never a good idea –
even if you feel you have no
other options.

16. • Loan sharks will start out appearing
friendly. And if you keep up your
repayments, they might stay that
way.
• But the reality is, even if you do, any
money you borrow will come at a
very high price

17. There are many risks
• You pay far more in interest than you
would through any legal borrowing. One
woman in UK who borrowed £500
(R10,000) ended up repaying £88,000
(R1,760,000)
• You might be harassed or threatened if you
get behind with your repayments - there
have been reports of people being
intimidated or attacked.
• You might be pressured into borrowing
more money to repay one loan with
another, and end up in a spiral of debt that

18. A Loan Shark might…
• Offer little or no paperwork, such as a
credit agreement or record of payments
• Refuse to give information, such as the
interest rate or how much you owe
• Take items as security, such as
passports, bank cards or driving licenses
• Increase the debt or add additional
charges at any time

19. A Loan Shark might..
• Refuse to allow you to settle your
debt
• Get nasty - they might resort to
intimidation, threats or violence

21. Remember Very Very High interest
Rates

22. Once you borrow money from a
mashonisa, you will be indebted
for life
• “I am a victim of a loan shark. They
are very aggressive if we don’t pay or
if we miss a monthly payment. I
cannot report them as they will come
after my family. They are making
thousands from us. If we borrow a
mere R3 000, we end up paying back
something like R60 000,”

23. They don’t care you are sinking in
debt!

24. Another man wrote to the City
Press
• “The interest she is paying is 50% a
month, so, on a loan of R1 500, she is
paying an amount of R750 every
month. Already, she has paid back R6
250 – but still owes more. My concern
is that she has paid many times more
than she borrowed and she still keeps
paying. My kids are suffering because
of this madness,”

26. • In desperation, a father wrote to City
Press because his son’s life is at risk.
• “My son borrowed R1 000 at a 50%
interest rate. The debt has ballooned
to R15 000 and it is growing at an
alarming rate. On the day he is
supposed to pay back the money, the
loan shark locks his gates and releases
the dogs so you cannot get to him to
pay. We cannot go to our police
station as they are colluding with the
lender.”

27. • Another victim borrowed R7 000 from
a loan shark and had to pay the
interest of R3 500 by the end of the
month.
• “Unfortunately, something came up
and I could not make payment. He is
now telling me I must give him my
bank card and identity document so
that he can be sure he will get his
money,” the reader wrote.
• Remember this is just the interest

28. • As these testimonies prove, if you
borrow from a loan shark, they will
hound you relentlessly as you struggle
to meet their repayment terms.
• 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

29. Know the Law!
• The first thing to know is that it is
against the law for someone to
lend you money if they are not
registered with the National
Credit Regulator (NCR).

30. • In 2015, amendments were made
to the National Credit Act that
require anyone who grants loans
to be registered as a credit
provider.
• Previously, someone could grant
a loan without being registered as
long as they had less than 100
credit agreements in place or lent
less than a total of R500 000.

31. • However, loan sharks were
abusing this provision and the
amendments were introduced to
close this loophole.
• Although it will be impossible to
completely eradicate mashonisas,
the law allows the NCR to
investigate complaints and refer
the perpetrator to the National
Consumer Tribunal for
prosecution.

32. • Lesiba Mashapa, the company
secretary at the NCR, told City Press
that “one of the biggest challenges is
that some communities themselves
protect these loan sharks because, in
this weakening economy, they offer
the only access to credit”.
• “However, the change in legislation
will make it easier to shut them down
and more difficult for the loan shark
to collect their loans as they will be
illegal.”

33. Against the law!
• Since November 11 2016, failure
to register as a credit provider
could result in the credit
agreement being declared void
(not legally binding) because it is
an unlawful agreement.

34. Scared for their lives!
• The challenge, as Mashapa points out,
is that loan sharks are either
protected by the community, or
people are too scared to report them
because they fear for their lives

35. • . However, the NCR cannot
investigate a mashonisa unless a
formal complaint is made.
• Nosipho Zikishe, the supervisor of
the complaints department at the
NCR, says that any complaint will
be attended to without
exception, and says that the
identities of victims of loan sharks
will be protected.

36. • In cases where a bankcard or ID
documents are withheld, the NCR
will involve the Specialised
Commercial Crimes Unit, not
officers at the local police station.

37. •Loan sharks prey on
desperate people and
their activities must
be reported.

38. HOW TO COMPLAIN TO THE NCR
• If you wish to lodge a complaint, 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
011 554 2700.

39. • In the form, you will need to include
your details as well as information
relating to the loan shark. Zikishe says
that the NCR aims to provide
feedback on written enquiries within
10 working days. If you have not
received a response within that time
frame, you need to escalate the issue
by contacting the call centre.

40. • Nosipho Zikishe, the supervisor of the
complaints department at the NCR,
says that any complaint will be
attended to without exception, and
says that the identities of
victims of loan sharks will be
protected.
• That is You!
Remember>>>>

41. Do not become a victim or you will
be crying!

42. • Tips
As many loans are for funerals, please
make sure you have a funeral plan for
yourself and all family members. It is
much better to pay a little every
month.
• Try to budget your money and keep
to your budget as much as
possible
What can we do to avoid borrowing
money from a loan shark?

43. • Tips
Rather use hire purchase
• Lay by
• Borrow from a friend or relative
• Get a personal loan from a bank.
What can we do to avoid borrowing
money from a loan shark?

44. •Talk about any
other ideas?????
What can we do to avoid borrowing
money from a loan shark?

45. • If you feel you have to take a loan do
not give your ID, credit card and pin
number.
• Do not just pay interest because this
means that the actual amount never
goes down and if you miss a month
the amount just gets bigger
• and bigger!
But if you feel you have no choice..

46. • Keep a record of every payment and
get receipts if you can.
• If you are threatened with violence
contact the police.
• Or complain directly to the NCR.

47. Let’s talk
• Now let’s talk
about your stories
and what you
have learned.

48. Thank you!
• We hope this
workshop is
going to help
you not to step
in the shark’s
mouth next time
you need
money?