If I really need a loan, where can I go?

First, identify and understand what you need the money for. Make sure it is for something very important and that you are able to meet your repayment obligations. Here are some points to consider when deciding where to borrow money:

Loan Company/ Money Lenders

If you do feel you definitely have to take out a loan, explore several options and choose a loan company which you feel comfortable with and which offers you fair terms. We encourage you to consider lending from an ethical source. Do not borrow from unlicensed money lenders as that can leave you unprotected and vulnerable.

As much as possible, avoid getting into a cycle of debt and make sure you are protected. Before signing a loan, first ask yourself:

• Is the loan for a ‘need’ or a ‘want’?

• Is the lender licensed? Unlicensed money lenders give illegal loan terms.

• Will I receive certified documents (e.g. contracts, receipts, statements) for my records?

• Do I understand the loan terms? Can I afford the monthly repayment and the late payment fees?

• Will the lender keep my passport? It is illegal for anyone to do this except for me and the authorities.

Speak to your employer

If possible, talk to your employer first before taking out a loan. Explain what the loan is for and let them know you are thinking of borrowing from an agency. If they are open to it and can afford it, you could ask for a salary advance and arrange legal payment terms with them rather than taking out a loan with an agency or friends. This can help to avoid the very high interest rates that loan companies (and sometimes friends) will charge. If you come to an arrangement with your employer, be sure to put it in writing and to honour your side of the agreement. Note that loan repayment to your employer cannot legally be automatically deducted from your salary and needs to take place in a separate transaction between you and your employer.

Friends, relatives or individuals

We do not advise you to borrow money from friends, relatives or other individuals as this can you leave you unprotected and vulnerable. Similarly, we do not advise you to sign a loan for your friend or relative as a guarantor - this means that you are agreeing to repay the loan amount if your friend is unable to pay and defaults on the loan. Only take this risk if you can afford it.