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Borrowing Money Safely — How to Spot Loan Sharks

When you need money urgently, it is tempting to borrow from whoever will lend to you quickly. But some lenders are illegal and will trap you in debt with impossible interest rates. This guide helps you borrow safely — or not at all.

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The maximum interest rate allowed by law is set by the National Credit Act. For unsecured loans: 3% per month (36% per year). Any lender charging more than this is breaking the law.

Legal lenders vs loan sharks

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Legal lenders (registered with NCR)

Banks, registered microlenders, and credit retailers like Shoprite Money Market. They must: show you the full cost before you sign, give you a credit agreement in writing, not take your ID or bank card as security, not charge more than 3% per month interest.

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Loan sharks (mashonisas / illegal lenders)

They charge 30–100% per month interest. They take your bank card and PIN. They deposit money into your account and take the full repayment (plus interest) directly. They threaten you if you cannot pay. This is all illegal.

Warning signs of a loan shark

check_circleThey ask for your bank card and PIN — no legal lender does this
check_circleThey advertise on WhatsApp or flyers with no company name or registration number
check_circleThey promise money within minutes with no credit check
check_circleThey charge interest in advance or deduct fees before giving you the money
check_circleThey cannot give you a written agreement
check_circleThey threaten you or your family if you cannot pay

Safer options before borrowing

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Before you borrow, consider these options — they are free or much cheaper than a loan.

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Ask family or friends

No interest, no fees. Write down the agreement to avoid conflict later.

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Stokvel or savings club

If you are not already in one, consider joining. Members contribute monthly and receive a lump sum in rotation.

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Your employer — salary advance

Some employers offer salary advances (getting part of your next salary early). Ask your HR or payroll department.

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Registered microlender

If you must borrow, use an NCR-registered lender. Check their registration at ncr.org.za or call 0860 627 627.

How to report a loan shark

1
Do not pay more than you legally owe

If you have already borrowed from an illegal lender, get legal advice before paying more.

2
Report to the NCR

Call 0860 627 627 or visit ncr.org.za. They investigate illegal lenders and can take action against them.

3
Report to the police

Loan sharking is illegal. If they are threatening you, go to your nearest police station and open a case.

4
Get free legal advice

Legal Aid SA (0800 110 110) can advise you on whether what they are doing is illegal and what your options are.

Contact your bank immediately and cancel the card. Report the card as stolen or compromised. The bank will issue a new card with a different number. Do this before the lender's deduction date if possible.

Yes. A stokvel is a traditional savings club and is legal. The key difference from a loan shark is that stokvels use members' own money with no interest — it is a savings system, not a lending business.

If you have not made a payment on a debt and have not acknowledged the debt in writing for 3 years, the debt may have prescribed (expired). You may no longer legally owe it. Always get legal advice before using this defence.

Key contacts

NCR (report illegal lenders): 0860 627 627
Legal Aid SA: 0800 110 110
Police: 10111
SAPS (nearest station): Go in person
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This guide provides general information only. Always verify at official government websites. Mzansi Money Guide is independent.