Looking for loans in all the wrong places

LISTEN: Looking for loans in all the wrong places

There’s a terrible irony in someone trying to get a loan and losing money instead, but sadly it’s a very common scenario.

Loan advert
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Listen to Wendy's on-air segment or read the full story below the podcast.

“Peggy’s” case is fairly typical of how the fraudsters operate…

Her husband needed money in a hurry to buy a new engine for his work bakkie. And Peggy thought an email she’d got from a company calling itself Go Loans, offering personal loans, was the answer.

For a R20,000 loan, she’d pay at a rate of R760 per month for three years. She was asked to send a copy of her ID, proof of address and three months’ pay slips, which she did and was told she’d been approved.

She was asked to pay a R3000 “legal fee” upfront first, which she did, suspecting nothing.

Then came a request for a transfer fee of R6000 and then a clearance fee of R3 000.

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A total of R12 000, with all those amounts to be paid into different bank accounts.

Of course, had Peggy, who lives in the Northern Cape, been asked to pay R12 000 in one hit, upfront, she’s very unlikely to have co-operated, which is why fraudsters reel their victims in slowly, bit by bit, each payment being followed by a request to pay some other fee.

And the fraudster wasn’t quite finished with Peggy after getting that R12 000 out of her.

He told her to present herself at their Sandton offices to sign the papers in person - or send a senior advocate to do so on her behalf. Or they would arrange it at an extra cost of R8 450.

She finally realised she’d be conned.

“They had been playing me from the beginning until I had not a cent left,” she said. “My whole salary is gone. 

“I had to loan money to pay my debit orders.”

ALSO READ: LISTEN: You want it, but is it worth a bad credit record?

So with yesterday being World Consumer Rights Day, and the theme being “Consumer rights in the digital space” - the National Credit Regulator teamed up with the National Consumer Commission to spread the word about some the traps that await un-savvy consumers on the internet.

What to look out for before applying for loan 

I chatted to the Credit Regulator’s education and communications manager, Mpho Ramapala about the red flags people should know about when loan shopping.

1.Those loans adverts - Blacklisted welcome, or “no credit checks done”. That tells the the money lender is not registered with the Credit Regulator and therefore operating illegally. At best you’ll be charged an exorbitant interest rate. 

2.If you’re after a loan and you are asked for an upfront fee first, disengage, fast! 

The National Credit Act allows credit providers to charge a so-called initiation fee. It can be built into the credit agreement, in which case you pay interest on it, or you can choose to pay it upfront to avoid paying interest.

But don’t confuse that legal initiation fee with a demand for payment when you apply for a loan. If paying a fee upfront is the only way you can get the money loan, it’s a scam.

3.Don’t give your banking details out when applying for a loan online. If the name of the company sounds like Looking for a Loan - Loan Scout, Loan Locator etc - by applying online, you are actually agreeing to a subscription to a telephonic phone service. The last thing a loan seeker wants to be debited for every month. Avoid at all costs.

4.A credit provider has to be registered with the National Credit Regulator. So always check their registration number. And check properly, Mpho says: “You must also compare the NCRCP number that is on our website and the NCRCP number that is on the website when they are applying for credit.”

That’s easily done - go to www.ncr.org.za and click on Credit Provider. There you’ll find a list of registered credit providers as well as lists of those whose registrations have been cancelled by the National Consumer Tribunal, and those whose registrations have lapsed.

Doing your homework, no matter how desperate for money you are, is the only way to stay one step ahead of the dodgy money lenders, and that’s where you need to be to protect yourself and your bank account.

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