There are many reasons people choose to use micro-loans. Usually, these loans are easier to get than loans from traditional banks. They often take no more than a few minutes to apply for and the appeal of having money drop into your account at the click of a button is enough to make anyone consider opting for a micro-loan to get them to the end of the month.
Micro-loans are typically offered by independent financial institutions – some legal and others not. Illegal institutions can charge upwards of 50% interest every month – and even legitimate companies tend to add additional charges to get the most out of every customer. Ultimately, what the customer thinks of as a small loan can quickly become a large debt if it’s not paid off very quickly.
Customers generally need to pay off micro-loans within 12 months – if they can keep up with the interest.
Complaining About a Micro-Lender
If you think that you’ve been taken advantage of by a micro-lender, you have the right to complain. It is usually best to try to sort the problem out with the lender first, but if this doesn’t work, you can turn to MicroFinance South Africa (http://www.mfsa.net/), who represent more than 2 000 lenders.
If you find that you’re still stuck, you have the option of reporting the lender to the NCR (https://www.ncr.org.za/).
Rather than opting for a micro-loan, have a look at your monthly budget and see if you can cut some corners to save some expenses this month.