Unlike mashonisa loans, Lamna is registered with South Africa’s National Credit Regulator (NCR) and is an accredited Financial Services Provider (FSP).
Much like mashonisas, we offer an alternative to traditional bank loans – but without any of the downsides.
In this article, we cover the following:
- what are mashonisas?
- the growth of mashonisas in South Africa
- what’s driving their popularity
- the disadvantages of mashonisas
- what Lamna offers.
What are mashonisas?
A mashonisa is anyone who lends money to people in his or her community, but who isn’t a registered lender with the National Credit Regulator. Essentially, a mashonisa can be anyone in your community who’s happy to lend money to people in search of a loan.
Typically, these loans are very short-term, a month or less. They can range from as little as R50 to R5,000 or more.
Because of their informal nature, the trustworthiness of a mashonisa is always a gamble. Mashonisas set their own fees and interest rates.
Growth of mashonisas in South Africa
There’s no shortage of mashonisas in South Africa. Conservative estimates put the number at 40,000 active mashonisas. In Khayelitsha alone, there are 1,350 mashonisas in operation serving approximately 135,000 households.
Research suggests that up to 80% of South Africans have used a mashonisa. It’s easy to see why.
Despite the lack of regulation, mashonisas fill a gap in the lending market with very small loans that aren’t available from banks and other short-term lenders.
It would be easy to assume mashonisas are always unscrupulous loans sharks preying on desperate people. In fact, many borrowers prefer to use them.
The convenience and ubiquity of these informal loans means they’re growing in popularity. As a result, meaningful regulation is virtually impossible.
It’s not only poor people who take loans from mashonisas in South Africa. As far back as 2017, a Mail & Guardian article noted how middle-class South Africans were turning to mashonisas. An informal lender in Sandton noted that he “often finds himself lending money to people who earn quadruple or seven times his salary”.
What’s driving the popularity of mashonisas
There are a few factors driving the popularity of mashonisas in South Africa:
Convenience. It’s easier to borrow money from someone living in your community than travelling to a lender’s office.
Speed These types of loans are almost always instantaneous.
No credit checks. Mashonisas are less likely to be interested in your credit score as long as you’re able to repay the loan.
Simplicity. Going to a mashonisa is simpler than worrying about lengthy application processes.
Fixed interest rate. Despite being high, the interest rate doesn’t vary depending on the amount being borrowed.
Disadvantages of mashonisa loans
Unsurprisingly, mashonisas don’t always have a good reputation. Many consider them to be disreputable loan sharks.
Either way, their lack of regulation is a genuine concern. It means they can charge as much interest as they like – up to 50% in some cases.
Because there is no NCR oversight, there’s also nothing to stop mashonisas charging hidden fees and penalties. For example, a mashonisa may charge extra if a loan is repaid early.
The potential for criminal activity is also high. Independent investigations have found that collection practices can include intimidation, social shaming and the seizure of assets.
What we offer at Lamna
Lamna offers another alternative to mashonisa loans or traditional bank loans.
With us, you can use a paid-off asset, such as a car or piece of jewellery, to secure a short-term loan. We’ve been offering asset-based loans for many years and have physical branches in most major cities.
Our loans are also fast, simple and don’t impact your credit score. Unlike mashonisas, we’re a registered FSP and adhere to NCR regulations. There are no exorbitant interest fees or hidden penalties.
At the end of the loan period, provided the loan and interest are repaid, you keep your asset. This type of asset-based loan is a low-risk way to unlock the value of an asset without selling it.
For more information about using an asset to secure a short-term loan, contact us on 086 111 2866, WhatsApp 071 108 4797 or simply complete and submit our online application form.
ILLUSTRATIVE EXAMPLE
Client borrows R10,000 for 90 days.
Loan Amount | Repayment Period | Monthly Interest | Total Cost of Loan | Initiation Fee | Monthly Fee | APR |
|---|---|---|---|---|---|---|
R10 000 | 3 months | R500.00 | R2 914.50 | R1 207.50 | R569.00 | 60% |
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.