One woman’s loan shark nightmare

Susan Erasmus
2015-05-22 14:06
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Cape Town - A R6 000 loan from a loan shark to pay for her father’s funeral almost destroyed the life of a young mother of two.

Nomsa Booi* is now 42 years old and lives in a basic 2-bedroomed house in Khayelitsha with her two children and a granddaughter. Her husband is deceased.

Four years ago when her elderly father died after stroke complications, she realised that no one else in the family could or would contribute towards his funeral costs. She also didn’t have the money, so in desperation she decided to borrow R6 000 from a township cash loan business. She was unemployed at the time and normal financial institutions were unlikely to give her credit.

Here is her shocking story.

What made you consider going to a loan shark? No one had that kind of money and we had to bury my father. I knew it was dangerous, but I had absolutely no choice.

Where did you hear about these particular people? I had heard about this particular business from a friend, who had borrowed money there to pay for her daughter’s funeral.

Did you have to sign any papers? What were they? I signed lots of papers, and they granted me the loan on the basis of being a homeowner. There was lots of small print and I was not given time to read all 5 or 6 papers. But one thing it did say that I remember is that if the loan is not paid back within two years (with interest) it gives them the right to sell my house. I signed, because I had no choice. They only return the card once the loan and all the interest is paid off.

Did they take your ID book or bank card? They took my ID book and asked for my bank card and PIN. I fortunately had no bank card, because I know what happens is that they take people’s cards and keep them for the duration of the loan repayment time. They draw the money out of your card that makes up your monthly loan repayment, and give you whatever is left over. I had to take them the money every month as I did not have a bank card. They kept my IF book for two years.

How long did they take to give you the money? They gave me the money in cash within two days of my application.

Did they tell you how much you would have to pay them back and for how long? Not in the beginning. Once I had returned from the Ciskei where my father’s funeral had been, I was given a piece of paper by them to say that I owed them a total of R13 580. In the end I paid them R2 000 per month for 2 years and six months. When I confronted them about why it was so much and why it carried on and on, they told me that I had missed a month, and therefore I had to pay double for that month.

How much did you end up paying them? Probably in the region of R60 000 altogether. I was afraid that they would sell my house if I didn’t pay them. When they sell your house, they do not give you the difference between what they sell it for and what you owe them. I was afraid to make them angry. One of my friends who stopped paying his instalments, was beaten up after they went looking for him and lost most his teeth. People are afraid of them, so they carry on paying.

How did this affect your and your family’s life? I had to move out of my house and move in with a friend, so that I could let my house to generate an income. I had no money for school fees, food or transport. We were in a very bad place financially.

Would you do this again? I would never do something like this again even if I was desperate. I have a job now, so I could apply for a loan at the bank, where it costs much less to borrow money. Or I would ask a friend, but I would never go to the loan sharks again.

What advice would you give other people who suddenly need money in a crisis? Find any other way, but just don’t go to these people. It’s so difficult to get things back on track. I feel I wasted so much money and it makes me sad. People must be warned that it has happened in the past that some loan sharks use ID books of clients to open accounts without their knowledge.

(As told to Susan Erasmus, freelance writer.)

*Not her real name, but her identity is known to Fin24.

* Comment from interviewer: She found a job shortly after her father's funeral and let her house in order to make the payments. The job is mentioned in the second last question and in the third last question the renting out of the house is mentioned. Those two things generated an income.

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