Consumers borrow from mashonisa at the risk of losing life or limb
In spite of the risks associated with borrowing from mashonisas, many people who know better still choose to go this route. Sowetan Money wanted to find out why.
The main reason is that the loan is approved - and very easily.
There are no intimidating forms to be filled in, no salary slips to verify income, and no questions about your monthly expenses.
In other words, there is no assessment of whether you can afford to repay the loan or if you are good at repaying credit.
This is unlawful in terms of the National Credit Act (NCA), which aims to protect you as a borrower from becoming a victim of reckless lending, among other things.
Under the NCA, all credit providers must be registered with the National Credit Regulator, including the mashonisas.
Another reason people use the services of the mashonisas is disbursement occurs almost immediately. The mashonisa can pay you out faster than a registered lender.
One large lender, Bayport, says it needs up to one day to assess whether an applicant can afford a loan, but it could be longer if the applicant's employer doesn't co-operate in verifying your employment.
It then takes another 24 to 48 hours to pay out a loan.
The mashonisa is generally known to the community as he operates in the vicinity. Regardless of his unsavoury means of debt collection, most people feel they are borrowing from a person they know and hope he might be lenient to them. He's available 24/7.
However, you should remember that if you use an unregulated lender they cannot be easily be brought to book and there are no ways of addressing the debt when you get into difficulty as there are when you use a registered lender.