loan shark

When you need a short-term loan and a bank loan isn’t an option, it’s vital to use a reputable financing company that complies with the National Credit Act. Unfortunately, South Africa has more than its fair share of untrustworthy or downright illegal lenders, or “mashonisas” as they’re known locally.

Illegal lenders offering short-term loans have a reputation for using misleading advertising, with offers of “cheap” loans that lure people into accumulating debt. They also have a reputation for:

  • charging absurd interest rates on loans and compounding those rates as often as weekly so that they’re sky-high within a few months
  • setting extremely short repayment periods, knowing that most of their clients won’t be able to make the repayments and so will fall into further debt
  • making direct debits from borrowers’ accounts, including upfront fees for non-payment
  • taking borrowers’ ID documents and credit or debit cards, and refusing to return them until loans are settled in full
  • refusing to give borrowers copies of loan agreements or any documentation at all
  • using threats of violence (or actual violence) to collect payments.

Even if you urgently need a loan to make ends meet or to capitalise on an opportunity, make sure you do your homework and apply common sense, borrowing from a reputable company such as lamna, which adheres to the National Credit Act, rather than from a shady loan shark.

Moneylending scams to avoid

If you consider borrowing from a moneylender, make sure that you know the exact terms of the loan agreement and have them in writing. Ask enough questions to ensure that you’ve understood the loan terms properly, including points like the effects of compounding interest.

Don’t even consider handing over critical documents like your ID as collateral.

In addition, watch out for the following basic but common types of moneylending scams.

Fee collection

A lender may offer you the world – a loan for as much as you need, at favourable terms that no traditional financial institution can come close to matching. However, there’s just one catch. You’re asked to provide an upfront fee to secure the loan. No doubt you’ll be offered a justification for this, such as the lender having too many clients competing for the few loans on offer.

If this sounds familiar, beware! Collecting upfront fees from would-be borrowers of loans and then disappearing overnight is a common scam.

Last-minute changes to loan terms

Another common scam to watch out for is the time-honoured “bait and switch”. In this case, a loan shark will outline highly favourable loan terms, impressing you with an offer of a large sum at a very low interest rate and with a flexible repayment schedule.

Once you’ve pretty much agreed to a loan and are about to sign the dotted line, you’ll find that the terms of the loan have been changed. In fact, the interest rate is much higher, there’s an upfront fee for securing the loan and so on. At this point, walk away.

Asset-based loans: an alternative to loan sharks

If you have valuable assets, such as a car, expensive jewellery or artwork, you may opt to get funding in the form of an asset-based loan.

In this case, you don’t have to sell your assets. You also avoid having to interact with a traditional moneylender. Instead you can deal with a reputable company that specialises in asset-secured short-term loans, providing quick access to funding but with straightforward terms and no “monkey business.”

For more information about how lamna’s asset-based loans work, see our FAQ or call us on 086 111 2866.

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APR & Loan repayment period

Fixed rates range from 36% to 60% APR and payment options range from minimum 3 to maximum 24 months. Apart from the initiation and monthly fees shown below, the only additional fee is credit life insurance if the borrower does not have this already.


All accounts may be renewed if they are up to date.


All payments are made via EFT or direct deposits into Lamna’s bank account. There are no debit orders.


Non-payments may result in the matters being escalated.

Illustrative example

Client borrows R10,000 for 90 days.

Loan Amount Repayment Period Monthly Repayment Total Cost of Loan Initiation Fee Monthly Fee
(Interest + Service charge)
R10 000 3 months R568.40 R12 902.20 R1 197 R560 60%