Borrowers Not Obliged to Repay Money Owed to Unregistered Loan Sharks ‘Mashonisa’, NCR Confirms
The National Credit Regulator (NCR) has clarified that South Africans who borrow money from unregistered mashonisas (loan sharks) are not legally obliged to repay the debt.
Even if taken to court, these lenders cannot claim interest because such contracts are considered unlawful and void.
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Rise of Unregistered Lenders
Mashonisas, often unregistered and operating outside the law, typically offer quick loans at exorbitant interest rates while using aggressive collection methods.
According to the SowetanLive, Nthabiseng Sefudi, a legal adviser in the NCR’s investigations department, revealed a worrying rise in such illegal lenders, who target vulnerable individuals with no affordability checks.
“Some loan sharks will go as far as attaching your personal property, resort to violence or harassment due to nonpayment. The loan shark might go to the small claims court to recover monies, however, they will not be liable to claim interest. If the lender is unregistered, their customer is not obliged to pay as the contract would be unlawful and void. If they are registered the customer will need to pay to avoid legal consequences or judgment being obtained against them,” Sefudi told Sowetan Consumer.
Exploitative Practices
One of the most common tactics used by mashonisas is holding onto borrowers’ bank cards and PINs as surety.
They then withdraw repayments and additional interest directly, only returning the cards once they are satisfied. Such practices leave borrowers vulnerable to exploitation and financial abuse.
NCR Urges Borrowers to Verify Credit Providers
Sefudi stressed the importance of ensuring that any moneylender is registered with the NCR, as required by the National Credit Act. Registered lenders must display their certificate and NCR registration number on their business premises. “Most people borrow from loan sharks in desperate need of financial aid, obtain quick loans and there is no affordability assessment conducted,” she explained.
Borrowers are advised to contact the NCR directly to confirm whether a lender is authorised to operate legally, to avoid falling victim to unlawful lending practices.
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The post Borrowers Not Obliged to Repay Money Owed to Unregistered Loan Sharks ‘Mashonisa’, NCR Confirms appeared first on iHarare News.
