The microfinance industry in South Africa is growing at a fast rate as more lenders register their services with the National Credit Regulator (NCR). South African consumers have access to a wide array of lenders, but the trick is finding lenders who are registered to provide these services.
What is micro finance lending?
This is a practice of lending out money and allowing the borrower to pay the sum back over a given period of time, paying interest while the sum is outstanding.
This type of lending generally benefits those who don’t have credit histories or sound collateral.
Accredited microfinance lenders must comply with the rules set by the Micro Finance Regulatory Council (MFRC) – the body which governs micro lending and allows micro lenders to charge higher interest rates than traditional financial institutions like banks.
To qualify as accredited microfinance lenders, financial institutions need to loan a maximum amount of R100 000. Loans are required to be paid back within 36 months.
5 reasons to use accredited microfinance lenders:
They are reputable
In South Africa, financial institutions that offer short term loans are required to be registered with the National Credit Regulator (NCR) and they must operate according to laws set by the National Credit Act.
They are fast
What makes these lenders popular are the fast processing times, simple application processes and qualifying criteria.
Lending criteria isn’t too stringent
Various lenders offer their own lending terms and amounts granted are usually based on individual affordability and creditworthiness. Banks generally have strict rules when lending. Traditional bank short term loans can be very hard to get, especially if you have a bad credit score, but micro lenders are often to consider mainly individual affordability.
Easily accessible
More lenders are available online, so you can apply from the comfort of your home.
You are protected as a consumer
By using accredited microfinance lenders you are assured of consumer protection.