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Cape Town - As costs for petrol and basic necessities spiral out of control, consumers are increasingly turning to family members and friends for financial assistance.
Consumers have exhausted their options in terms of qualifying for loans and many just cannot afford the exorbitant interest rates that unregistered micro-lenders charge.
A Fin24 user, who has started a money lending business amongst her family and friends, wants to know if she needs to register with the NCR.
Debt expert Moeshfieka Botha says the NCA (National Credit Act) applies to all credit agreements between parties dealing at arms length (where there is no personal interest between the parties).
"In the user's case you do not need to register. However, should your business grow to include members of the public in general, you will have to register when you have 100 or more agreements, or if one agreement is for an amount of R500 000 or more."
Friedl Kreuser of Summit Financial Partners cautions consumers not to make loans at banks or any other money lending institution on behalf of family or friends.
In response to another user's question about how she can make sure her friend pays her back if she takes out a loan on his behalf, Kreuser advises to politely decline the request.
"Although I imagine you feel compassion for his plight and want to assist, the fact is that the NCA is there for a reason.
"When a consumer does not qualify for a loan, it is because they cannot reasonably afford to pay it back. Cheating on the system does not really help anyone in the long run.
"If your friend misses any payments (which is unfortunately likely), you will be the one responsible for paying the bank."
Botha says although for some people the option of borrowing money between pay cheques is their only means of surviving, there are other ways to help ease the financial strain.
* Stop looking at the saving of money in literal rands and cents.
* Start switching off your geyser and start saving on electricity.
* Consider travelling by public transport.
* Save money by seeking discounts on early settlements of your debt.
* If your friends and or family members are struggling to make ends meet, a more responsible way to assist would be to help them get in touch with a good debt counsellor who can actually help them pay off their current debt and become creditworthy again.
* Put down your budget on paper and stick to it. Avoid purchases which you have not budgeted for.
- Fin24
* Add your voice to our Women's Wealth Issue and help empower others this Women's Month.
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Consumers have exhausted their options in terms of qualifying for loans and many just cannot afford the exorbitant interest rates that unregistered micro-lenders charge.
A Fin24 user, who has started a money lending business amongst her family and friends, wants to know if she needs to register with the NCR.
Debt expert Moeshfieka Botha says the NCA (National Credit Act) applies to all credit agreements between parties dealing at arms length (where there is no personal interest between the parties).
"In the user's case you do not need to register. However, should your business grow to include members of the public in general, you will have to register when you have 100 or more agreements, or if one agreement is for an amount of R500 000 or more."
Friedl Kreuser of Summit Financial Partners cautions consumers not to make loans at banks or any other money lending institution on behalf of family or friends.
In response to another user's question about how she can make sure her friend pays her back if she takes out a loan on his behalf, Kreuser advises to politely decline the request.
"Although I imagine you feel compassion for his plight and want to assist, the fact is that the NCA is there for a reason.
"When a consumer does not qualify for a loan, it is because they cannot reasonably afford to pay it back. Cheating on the system does not really help anyone in the long run.
"If your friend misses any payments (which is unfortunately likely), you will be the one responsible for paying the bank."
Botha says although for some people the option of borrowing money between pay cheques is their only means of surviving, there are other ways to help ease the financial strain.
* Stop looking at the saving of money in literal rands and cents.
* Start switching off your geyser and start saving on electricity.
* Consider travelling by public transport.
* Save money by seeking discounts on early settlements of your debt.
* If your friends and or family members are struggling to make ends meet, a more responsible way to assist would be to help them get in touch with a good debt counsellor who can actually help them pay off their current debt and become creditworthy again.
* Put down your budget on paper and stick to it. Avoid purchases which you have not budgeted for.
- Fin24
* Add your voice to our Women's Wealth Issue and help empower others this Women's Month.
Write a guest post
Share your coping tips
Ask the experts
