Don’t Let Those (Loan) Sharks Get You

Loan application amid a sea of loan sharks


If you're sinking in a sea of debt, it can be tough to keep the loan sharks at bay. Here's how to avoid bad choices when it comes to Personal Loans.


According to the Reserve Bank, South Africans owe lenders a collective R1.7 trillion, with more than 25 million people (out of a population of 60.6 million) being in debt to banks and money lenders. That's almost half of us. Eina!


Learn More: 5 Ways to Stay on Top of Your Debt


It's easy to see how this could happen to you. Let's say you're self-employed and are worried about your direct debits bouncing because you've had a few quiet months and can't afford to pay your basic monthly expenses. Maybe you can't pay your rent and are worried that you'll end up sleeping in your car (which you also can't afford). You ask your bank for an overdraft. It checks to see if you've got a good credit score, but your score's bad and so your loan request is rejected. In desperation, you approach an unregulated private lender.


Your immediate stress about falling behind on your bond or car repayment may be over, but you now owe money to a loan shark. They are merciless. You will be charged a high interest rate (between 50% and 112% of the original amount borrowed) to repay your debt.


Borrowing money is risky business

Sorry to say, but there are many lenders out there who target poor and desperate South Africans who will borrow now, without really knowing the consequences (paying far more later or being threatened or hurt if they can't make the minimum payment).


These dodgy operators may mislead you before you commit because they want to keep you in debt (by charging illegally high interest rates — a lucrative business). There is plenty of misleading info out there. Just Google "private lenders for high risk personal loans South Africa" and you'll find many ways in which those sharks will try to bite you.


It's best to think carefully before approaching an unfamiliar lender, and to know the warning signs in advance.


Five red flags to avoid being 'bitten' by a loan shark

Ready for some shark-spotting? If you find yourself in any of the following situations, run a mile!


  1. The lender asks for your passport, ID document or bank card for security. (This is illegal.)
  2. The lender pressures you to borrow before an offer expires, so you make a rushed decision.
  3. The lender offers to keep the loan quiet and off the record. That's against the law: all legal lenders must be registered with the National Credit Regular (NCR). If your loan is not registered, you might be breaking the law yourself.
  4. The lender does not ask you for documents such as bank statements to do a credit score check and doesn't check if you can afford to repay the loan.
  5. The lender's marketing claims that even black-listed applicants can get a loan, or that you don't need a credit check from the credit bureau. (Again, this is illegal.)

Get loan-wise with

Now that we've provided you with the 'binoculars' (tools) to help you spot a (loan) shark from a mile away, let's give you some tools to 'hook' an affordable Personal Loan instead. Yup, Hippo has a nifty Personal Loans comparison tool you can use to find a lender that's not only legal, but which also offers better options at more affordable repayment rates (no sharp teeth or nasty small print in the agreement to trick you). Whew.


This is to stop you drowning in a debt trap, where most of your earnings go into repaying loans every month and you have no way to get out of the mess.


Hippo finds solutions when it comes to debt too

  • Even if you're in a serious financial gemors, don't panic. You can consider debt management and educate yourself about Debt Counselling (also available via of course). It's also easy to find out what your credit score* is. Simply check by getting credit reports — from the four main credit bureaus — on Every South African is legally entitled to one free credit report per year.
  • Debt consolidation is another option. Here you'll pay one monthly amount at a rate you can afford, rather than loads of payments at varying interest rates (which cost more when added up). You'll take out one loan and settle your outstanding debts, and then pay off this single amount. Again, be careful: there are sharks in these waters too! You want to use a reputable debt consolidation company listed on
  • Educate yourself (and family) and develop the skills to avoid loan sharks. will help you make better money choices if you need financial relief with a Personal Loan so that you don't fall for bad advice or 'quick deals'.

*Don't know what a credit rating is? This determines how much a financial institution will lend you, depending on how good (or bad) your credit score is.


Pssst… did you know that Hippo can help you improve your credit score?

Missing a credit card or bond repayment will hurt your credit score. But if you've had a credit card for a while and have never used more than 50% of your credit amount (or you're good about paying more than the minimum amount into your credit card every month), this will show lenders that you're a responsible borrower. In this case, they might offer you a low interest rate to repay your debt.


So spend less on what you don't need, borrow wisely, and pay back as much as you can ASAP! That way you'll get a much better credit score while avoiding those sharks, and keeping all your (financial) limbs intact.


This article is for informational purposes only and should not be construed as financial, legal or medical advice.


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