How to Become A Money Lender In South Africa

Money Lender a person whose business is lending money to others who pay interest.

Can you lend money without Licence?

Applicability for registration and exemption. The Money Lending Act states that no money lender shall carry on the business of money-lending except in the area for which he has been granted a licence.

What is illegal money transfer?

A money mule is someone who transfers or moves illegally acquired money on behalf of someone else. Money mules often receive a commission for their service, or they might provide assistance because they believe they have a trusting or romantic relationship with the individual who is asking for help.

Is washing money illegal?

Money laundering is illegal because it is a way for criminals to profit from crime and often involve more than one illegal activity. Both the act and origin of money laundering make it illegal.

What is the role of a money lender?

The functions of moneylenders are:

(1) The main function of moneylenders is to give short-term loans. Loans may be given for consumption purposes, to meet social and religious obligations or the needs of farmers for seeds, cattle, fertilisers, etc. (2) Loans are generally given on the personal security of borrowers.

Below are Five Tips on How to Become a Lender In South Africa

Identify your preferred lending focus:

Without money, the concept of money lending wouldn’t exist. To become a lender, you need to know your capacity in lending. Having a little extra money in the bank doesn’t mean you just jump at becoming a lender.

Despite the lots of benefits for money lenders, isn’t a path for everyone. You need to be equipped to manage risks and take advantage of opportunities. There’s a high risk but it establishes wealth.

Join a peer to peer lending platform

Peer-to-peer lending (P2P lending) according to Wikipedia is “the practice of lending money to individuals or businesses through online services that match lenders with borrowers.” Peer-to-peer companies generally operate online and provide service more cheaply than traditional financial institutions.

Explain processes.

Money lenders provide for individuals in need of financials. While they serve the same purpose as traditional lending institutions, there are several differences.
Truth is, being a lender enables you to create your own loan terms depending on the borrower’s goals and timeline. The interest rate can be set by lenders or fixed by the intermediary company.

Don’t extend beyond your locality

The money lending business is most successful when lenders stay within their localities. As a lender in Nigeria, it is advisable to only negotiate with a borrower in Nigeria. Most of your borrowers should be within.

Be transparent

Your authenticity and transparency as a money lender will attract borrowers to you in a big way. Never put on a façade.
A transparent lender will attract a transparent borrower. Lenders encounter different types of borrowers and it’s the transparency in the lender’s transactions that allows a transparent borrower.

A Step-by-step Guide to Starting a Lending Business

Create Loan Products

After choosing a lending platform, and setting up your lending account on the platform, the next step is to create your loan products. Many platforms allow you to choose the types of loans you invest in from a list while some others allow you to create your own custom loan products.

Invite Borrowers

Now that you have set up your spanking new business, created/chosen your loan products and made funds available, it is time to invite borrowers to apply for your loan products. As mentioned earlier, the lending platform facilitates this process and links the borrowers to you.

Is money lending illegal in South Africa?

It’s a criminal offence to lend money for profit without a consumer credit licence, although it’s not illegal to borrow from such a company or person. Someone who engages in unlicensed lending is typically known as a loan shark. Loan sharks often lend money alongside another legal or illegal business.

Is money lending profitable in South Africa ?

While the role of moneylenders has reduced, they still continue to play a prominent role in the system. They continue to charge high rates of interest, which in turn leads to super normal profits. Money lending, hence has always been and will be one of the most lucrative business.

Can I lend and charge interest South Africa?

If you want to lend money and charge interest, you must be a registered credit provider. The NCA allows for a maximum of 31% interest to be charged a year. For a short-term loan that does not exceed six months, interest rates cannot exceed 3% a month.

Is it legal to lend money with interest in South Africa ?

Interest-free loans are non-taxable for both lenders and borrowers. However, it becomes complicated in case there is a provision for payment of interest, as the lender will have to pay tax on the interest earned. But then, unlike a friend, a bank will never lend you without interest or at a discount.

Can you lend money without Licence in South Africa ?

Applicability for registration and exemption. The Money Lending Act states that no money lender shall carry on the business of money-lending except in the area for which he has been granted a licence

Who can borrow me money in South Africa?

Lending Money in South Africa

Informal lenders. These are people who offer informal loans, often at extremely high interest rates.

Microlenders. These kinds of moneylenders loan out small amounts of money, sometimes as low as R500.

Pawnbrokers.

Personal loans.

Debt counselling: a final word.

What is illegal money transfer in South Africa ?

A money mule is someone who transfers or moves illegally acquired money on behalf of someone else. Money mules often receive a commission for their service, or they might provide assistance because they believe they have a trusting or romantic relationship with the individual who is asking for help.