If you lend money to a friend, a neighbor, or even someone from your church, you deserve to get it back. Let Scorpion Legal Protection help you with great legal and practical advice, so that you are not taken advantage of.
Lending money to someone means you are giving them money that you want back. The best practical advice we can give, is that you should know and trust the person you are lending to, and never lend more than you are willing to lose. The best paralegal advice we can give is when you lend someone money, make sure that you have a signed written agreement.
This written agreement should include:
- The date you lent the money
- The amount you are lending
- The date the money must be paid back (or dates if you have agreed on being paid in instalments)
- Your name, your signature and the date you signed the agreement
- Confirmation by the borrower that they received the money
- The name of the person you are lending the money to, their signature and the date they signed the agreement
- The name of a reliable witness, their signature and the date they signed the agreement (the reliable witness must be present when the person you lent the money to signs the agreement)
If you make a verbal agreement make sure there is also a reliable witness present, although we strongly suggest you make a written agreement as well.
It is very important to note that you cannot charge interest when you lend money. Only a financial services provider, like a bank, can do this.
Remember: If the amount you lend is less than R12 000, and the person you gave it to does not pay, you can take them to the Small Claims Court. The Small Claims Court is free to the public. You are not allowed legal representation in the Small Claims Court but at Scorpion we advise you to consult with us first before referring to or approaching the Small Claims Court, to fully understand all your rights.
Remember: Don’t wait too late! If the person you lent money to you has not paid you back three years after the agreed pay-back date, the money may be forfeited. This means you may not be able to get it back!
Borrowing means that you are asking someone else for money that you will give back to them at a later date. When you borrow money, remember to get all of the details of the agreement witnessed on paper.
Remember: Always borrow money from registered financial services providers like banks. Borrowing money from micro-lenders that are not registered (also known as loan sharks or Mashonisas) will put you in a very dangerous position. They usually charge very high interest rates and take your bank cards/ID/passport/furniture which is highly illegal and if you cannot pay, they may try to harm you, or your family.
Did you know?
- Before entering into an agreement, you should speak to someone you trust, like Scorpion Legal Protection, about whether borrowing or lending is a good idea.
- During the agreement, get everything you have agreed to written on paper, or witnessed by a person you trust, like a police officer.
- After the agreement has been entered into, make sure you keep all of the documents you have signed safe. If things go wrong, you will need them.
To learn more about this topic watch the video interview with Atish Dahya
Note: This is a very basic outline; please contact Scorpion Legal Protection for more details on this topic.