By Anita Dangazele
- Nosiphiwo borrowed money in January to buy school stationery and she now takes a new loan from them every month.
- South African law protects people from reckless lending but financial advisers say borrowers must stop debit orders through their banks.
Nosiphiwo no longer celebrates payday. The single mother of two from Zinyoka Township says the message from her bank brings her stress instead of relief.
Nosiphiwo works at a printing store in the Greenacres shopping centre. She says most of her R9,500 salary goes straight to an informal lender.
“I took out a loan from this other loan shark that doesn’t pay much attention to your credit background, because they deduct their money including interest on your payday,” she said.
She borrowed R3,000 in January to buy school lunch items and stationery. At the end of that month, the lender took R3,900 from her salary.
“That was the beginning of my problems. I have not been able to get out of that debt. I borrow the same amount every month,” she said.
Nosiphiwo says her remaining R5,600 must cover transport, school fees, rent and funeral policies. She says she cannot stop borrowing because she still needs groceries.
The National Credit Act says lenders must check if a person can afford a loan before giving it. This law is meant to stop reckless lending and protect consumers.
People who feel trapped can report lenders to the National Credit Regulator. The law also allows debt counselling. A registered counsellor can help restructure payments and protect income from unfair deductions.
Financial advisers warn that informal lenders often ignore these rules. They suggest opening a separate bank account, stopping debit orders through the bank and seeking help from registered debt counsellors.
For Nosiphiwo, the cycle continues. She says she feels stuck and sees no easy way out.
Pictured above: Nosiphiwo says most of her salary disappears on payday due to loan deductions, leaving her struggling to support her two children.
Image source: Anita Dangazele
