MANY South Africans are being driven into the hands of illegal lenders as financial strain tightens its grip on households, triggering urgent warnings from the Credit Association of South Africa (CASA).

While registered credit providers must follow strict rules under the National Credit Act, including affordability checks and capped fees, unregistered lenders often known as ‘mashonisas’ operate with no oversight, leaving consumers exposed to exploitation.

CASA CEO Leonie van Pletzen said the surge in illegal lending is being fuelled by a critical gap in the credit market.

“When people are denied formal credit, their need for money doesn’t disappear it pushes them toward dangerous, unregulated options.

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According to Van Pletzen these illegal operators frequently charge excessive interest, demand bank cards or ID documents as collateral, and use intimidation tactics to enforce repayment.

“Borrowers are left without contracts, legal protection, or the ability to build a credit record, often paying far more than they originally borrowed.”

The warning comes as CASA research shows many rejected credit applicants are increasingly turning to informal lenders, where protections simply don’t exist.

“A dual approach is needed, cracking down on illegal lenders while ensuring that regulated credit remains accessible. Financial inclusion and consumer protection must go hand in hand.

“If safe, regulated credit isn’t available, the illegal market will continue to thrive,” explained Van Pletzen.