How to Become A Loan Shark In South Africa

A loan shark is a person who or an entity that loans money at extremely high interest rates and often uses threats of violence to collect debts. The interest rates are generally well above an established legal rate, and often loan sharks are members of organized crime groups.

How does loan shark work?

A loan shark usually has lots of customers and lends money like a business, but their lending is illegal. Loan sharks often take other illegal action to collect the money they’ve lent you, such as threatening violence or taking away your credit cards or valuables.

What is considered a loan shark?

The definition of loan sharks are money lenders that practice predatory lending. Think of sharks in the ocean that prey on their victims. They offer emergency loans to businesses with extremely high interest rates that will basically kill you.

How do you deal with a loan shark?

You should report any loan shark to your local your local Trading Standards office and to the police if the loan shark threatens you or uses violence.

How to Become A Loan Shark In South Africa

How To Register A Loan Shark Business In South Africa:

To register a new micro finance company a non-refundable application fee of R500 is needed as well as a R250 branch fee per location. Application forms and all relevant regulations can be easily downloaded from the NCR website or you can download the forms below:

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Application for registration as a credit provider

Application for Registration as a Credit Bureau

Application for Registration as a Debt Counselor

How to register?

Documents and information required for the application for Registration as a Credit Provider in terms of Section 40 and 41 of the National Credit Act, 34 of 2005.

Include the following elements in your application to ensure the document is processed:

Completed and signed application form (form 2)

Companies and Intellectual Property Commission ( CIPC ) registration document or other official legal registration document

Copy of the share certificate/s if applicant is company

Certified copies of ID/Passports of all members/directors/trustees/partners/sole proprietors

Resolution if applicant is a juristic person (see attached specimen)

A Criminal Name Clearance Certificate for all the members/directors/trustees/partners or sole proprietors issued by the South African Police Services (SAPS) or other service providers listed in� annexure A.

Proof of payment of the registration fees:

Non-refundable application fee of R500

Branch fee of R250 per location or premises at or from which the applicant conducts registered activities

Initial registration fee as indicated in the table below for each sub-category of registrant.

A letter from the bank confirming the applicant’s banking details or a copy of a cancelled blank cheque.

Proof of registration with the South African Receiver of Revenue Services (SARS).

The National Credit Act

The National Credit Act (NCA) aims to promote responsible credit granting and use.

To achieve this, when a customer applies for credit, a credit provider would need to check whether the consumer can afford the credit The NCA regulations state that all new credit agreements need to disclose interest rates, fees and additional charges and regulates the interest rates charged to a maximum rate of interest that may be charged.

Add-on costs for insurance are prohibited.

Under the Act all costs must be advised in advance and the consumer has the right to arrange insurance directly, rather than pay the credit provider to do so. The Registration Division of the NCR is responsible for the registration of Credit Providers. Approval after submitting an online registration takes about eight weeks. All there requirements are carefully listed on the NCR site.

Are loan sharks legal in South Africa?

Loan sharks can even go as far as taking your ID and bank cards. Jeffery says according to civil law, taking anyone’s belongings is a criminal offence. According to case law, operating illegal lending makes it a criminal offence,” says Jeffery. You can also report any loan shark that charges you high interest rates.

Where can I report illegal loan sharks in South Africa?

Loan sharks should be reported to the NCR and the South African Police Service. “Clients should also contact the NCR to verify whether the institution is registered as an authorized credit provider, in line with the National Credit Act,” said Clarke.

How do I start a loan shark business in South Africa?

To register a new micro finance company a non-refundable application fee of R500 is needed as well as a R250 branch fee per location. Application forms and all relevant regulations can be easily downloaded from the NCR website or you can download the forms below: Application for registration as a credit provider.

Is it legal to be a loan shark in South Africa?

As we’re all well aware (and if not – listen up), loan sharks are not legal lenders. Another stat approximately 23.45 million consumers make use of credit in some way or form, from a credit card for a home loan.

Is it legal to be a loan shark in South Africa ?

Loan sharking is usually illegal, although predatory lending with extremely high interest rates such as payday or title loans is sometimes considered to be loan sharking, even when it is legal. Loan sharks sometimes enforce repayment by blackmail or threats of violence.

Can you go to jail for borrowing money from a loan shark in South Africa ?

These loan sharks will call your relatives and friends and will deliver the letter to your address by lawyers and will threaten you as such. Moneylenders threaten by proclaiming to file a case against you or take you to jail. However, they will never get into all this because they are illegal.

How much interest do loan sharks charge in South Africa?

Under the National Credit Act, such loans fall under the provisions for “short term credit,” defined as loans up to R8,000 for six months. On loans in this category, the NCR allows lenders to charge 5% interest per month, a one-time initiation fee of R150, and monthly service fees of R50.

What’s another word for loan shark in South Africa ?

In this page you can discover 3 synonyms, antonyms, idiomatic expressions, and related words for loan-shark, like: usurer, shylock and moneylender.

What does the law say about loan sharks in South Africa ?

You can report the loan shark to the National Credit Regulator. “Victims have won judgements in their favor. According to case law, operating illegal lending makes it a criminal offence,” says Jeffery. You can also report any loan shark that charges you high interest rates.