Chapter 12 - Consumer Law
What is microlending?
Microlending is an agreement between two people in terms of which one person agrees to lend money to another person. The person who is lending the money (the lender) will usually charge an extra amount called interest that is added onto the main loan. This is the lender’s fee for lending the money.
Registration of microlenders
In terms of the National Credit Act (NCA), all microlenders (as credit providers), must be registered with the National Credit Regulator. The NCA controls the amount of interest that microlenders can charge on money that has been borrowed by a consumer and all aspects of microlending.
Remember the following when making a loan from a microlender:
The contract/loan agreement with a microlender
A microlending agreement is drawn up when a lender offers to lend a consumer money and the consumer agrees to accept the terms of the repayment. When the consumer signs the contract he or she is agreeing to pay back the money and the interest according to the terms in the contract.
Any amount that is deducted from the loan amount reduces the principal debt.