Should You Take a Mashonisa Loan? 

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Make an Informed Decision

If you’re also interested in taking out a mashonisa loan, it’s essential to understand the risks and the advantages. Additionally, it helps to explore better options before approaching a loan shark.

KEY TAKEAWAYS

✔ Mashonisas are loan sharks or illegal moneylenders not authorised by the NCR.

✔ These loans are high-risk to the borrower, mainly due to exorbitant interest rates.

✔ The National Credit Regulator advises against mashonisa loans because of the risks.

✔ Online loans from registered credit providers are a better alternative to these loans.

What Type of Loan Is This?

A mashonisa loan is a type of high-risk loan you get from an informal moneylender or loan shark. These loans typically involve small amounts, short terms, and high interest rates. 

You can think of a mashonisa loan as a type of payday loan you can get on the black market.

Why Do People Take Mashonisa Loans?

Mashonisa loans are popular for several reasons. Firstly, mashonisa are usually local moneylenders that are well known and reside within the same neighbourhood where their borrowers live. 

That makes them easily accessible and getting a loan is convenient since there’s no travel involved. 

Getting a loan from a mashonisa is faster with no complex application process, paperwork, or lengthy approval times. 

Most of all, these informal lenders do not report to credit bureaus. They also don’t perform hard credit checks or affordability checks. This makes mashonisa loans a viable option for individuals with low income, poor credit, or those who have been through the debt review process.

Mashonisa Loans: Are They Risky?

Mashonisa loans offer easy, fast cash. But they also come with several risks. It’s important to evaluate the risks associated with these loans before making a decision.

These risks include:

• Expensive rates and fees
• Irresponsible lending 
• Unlawful collection methods
• Threats to your well-being
• Falling into the debt cycle trap

Signs You’re Dealing With a Mashonisa

• Inflated and illegal interest rates
• Not registered with the National Credit Regulator
• No affordability/income assessments or credit checks
• No formal paperwork, credit agreement, or record of payments
• Illegal practices such as taking or damaging your property and using bank cards and IDs to secure the loan

Mashonisa Loan: Should You Take It?

Consider the advantages and disadvantages before deciding whether to take a mashonisa loan.

Pros

✔️ Borrowing from a community moneylender is more convenient.

✔️ Mashonisa loan sharks offer instant loans.

✔️ No complicated application process.

✔️ No credit checks, which is ideal for blacklisted or bad credit borrowers.

Cons

❌ These loans are very expensive because of high interest rates.

❌ Disreputable loan sharks that operate outside the law.

❌ There may be no possible course of action for borrowers if something goes wrong.

❌ Can lead to a cycle of debt that’s difficult to escape.

The bottom line: The National Credit Regulator (NCR) warns against unregistered credit providers. Despite the pros, borrowers are encouraged to avoid these loans.

Find Better Loan Options Online

If you need a loan, the best option is to use an NCR-licensed lender. The good news is that many reputable South African credit providers offer alternatives to mashonisa loans. 

These alternative lenders follow NCR regulations, so unlike mashonisas, they don’t charge high, unregulated interest rates or fees. 

If you’re looking for mashonisa loans for blacklisted borrowers, asset-based or secured short-term loans can work for you. 

In that case, you can use a paid-off asset such as a car, motorbike, or jewellery as collateral. Since this reduces the lender’s risk, it can also help you get a lower interest rate. 

Find the Best Alternatives to Mashonisa Loans

The good news is that you can apply for a loan online with RandWallet and receive offers on your phone within seconds.

Apply for an Online Loan Today

Here’s how to apply in three easy steps:

»Step 1: Complete the online loan comparison form. You only need to complete a single loan application to unlock multiple offers from various lenders.

»Step 2: Compare offers to find the best one. Check the loan offers you receive to see which interest rate and other terms and conditions work best for your needs.

»Step 3: Get money in your bank account. Finalise the application with your chosen lender and get money in your bank account soon after approval. 

»NEXT:  Mashonisa Vs. Personal Loan Vs. Credit Card 

»LEARN MORE: Mashonisa Loans in South Africa