How to check if a money lender is registered

Sometimes money runs out before the month does, and a neighbour or a stranger offers a quick loan. It can feel like the only choice. Before you say yes, there is one check that takes a few minutes: is this lender registered?

This post explains what a registered lender is, how to check, and what to do if you find the lender is not registered. It is general information, not advice about a specific loan.

What is a mashonisa, and is it legal?

A mashonisa is a person who lends money privately, often for a high price. Lending money is allowed in South Africa. But the National Credit Act says a person who lends money as a business must be registered with the National Credit Regulator (NCR). The NCR is the government body that watches over lenders.

Since November 2016 there is no minimum loan size for this rule. A small loan still needs a registered lender.

How do I check if a lender is registered?

The NCR keeps a public list called the Register of Registrants. You can find it on the NCR website, ncr.org.za. Follow these steps:

1. Ask the lender for their full business name and NCR registration number. A registered lender can give you both.
2. Search for the name on the Register of Registrants.
3. Check that the name matches and that the registration is current.

If the lender will not give you a name or a number, treat that as a warning. Do not sign anything and do not hand over your ID, your bank card or your PIN.

What should a loan contract show?

A lender must give you a written agreement in a language you understand. Read it before you sign, or ask someone you trust to read it with you. It should show:

• how much you receive, in rands
• how much you must pay back in total
• how much you pay each month and on which dates
• the interest and all fees

Ask for a copy for yourself. If a lender only talks and does not write anything down, you cannot prove what was agreed.

What is not allowed?

A lender should not keep your bank card, your PIN or your SASSA card as security. Holding these cards is a common reason people lose control of their money. If your card is already with a lender, ask your bank how to cancel it and get a new one.

A lender also cannot threaten you or your family. If you feel unsafe, contact the police.

What if the lender is not registered?

The law says a loan from a lender who should be registered, but is not, can be declared void by a court. Void means the agreement is treated as if it never counted. That is a legal process, so you need help to use it.

• Do not stop talking to the lender in anger, and do not make new promises you cannot keep.
• Keep every message, receipt and note of what you paid.
• Contact the NCR through its website and ask how to report an unregistered lender.
• A debt counsellor or a legal aid office can explain your rights. Ask before you pay for any help, and be careful of anyone who asks for money up front to "clear" your debt.

What can I do instead of borrowing?

Borrowing is sometimes the right choice. If you can, first look at these smaller steps:

• Ask a service provider, such as your landlord or electricity supplier, if you can pay late or in parts. Do this before the due date.
• Ask a stokvel or family member for a small amount with a clear date to repay.
• Write down what you must pay this month and in what order: food, transport, rent, electricity. This shows you how much you really need to borrow.

Earning a small amount extra can also help a little. On Mocash you can do surveys and offers and withdraw your rewards. Earning from an app is small, slow and not guaranteed, so it is not a replacement for income. Partner rewards can wait up to 30 days, so it does not suit an emergency. Our post how much you can actually earn from a money-making app explains what is realistic.

If you are also worried about scams, read seven red flags of a fake earning app. Many of the same warning signs apply to loan offers: a fee before you get anything, pressure to hurry, and no name you can check.