“Open any newspaper, check your junkmail or read one of the many unsolicited sms or WhatsApp messages and you will find an advertisement from a credit provider offering an instant credit loan, some even going so far as to state you are immediately approved. But how legit are these solicitations?”

Many consumers are in need of a quick financial injection and the lure of these unsolicited requests to get a quick and ‘hassle free’ loan without lots of paperwork can seem quite appealing. Generally though, caution should be your first instinct as these solicitations are aimed at luring consumers into loan transactions that are not necessarily aligned with the requirements of the National Credit Act (NCA). The NCA was enacted to protect consumers from reckless credit provision and over-indebtedness. As such it places a mandatory obligation on all credit providers to investigate the credit worthiness of a consumer before approving a loan to them. Should it then transpire that a consumer is not able to afford the loan and the provider continues to provide credit, this will amount to reckless lending in terms of the NCA.

So, when a credit provider makes the promise of an instantly approved loan, this flies in the face of the NCA requirements. Often these loans provide the promise of award without the need for a credit application and credit assessment. Additionally, loan terms can be aggressive and have sky-high interest rates and other unfavourable conditions not in compliance with the requirements of the NCA. 

Without going into too much detail, it suffices to provide a general warning to consumers to be careful when considering such loans. Take into account the reputation of the proposed provider, the channel through which the solicitation came, statements regarding pre-approval etc. If it sounds too good to be true, it may just be! Do your homework, read the fine-print and don’t sign or commit to anything if you are not comfortable. And if you have signed up for such a loan in the past, consider letting your attorney review the terms for you to see whether these comply with the requirements of the NCA.