Micro loans are short term loans with very high interest and service fees.
Why do people take it out?
“It is easy accessible. People are desperate, and the amounts they take on loan are small. BUT micro loans put people into a debt spiral. When you take out a micro loan you think you will pay it back immediately, but then, next month something unforeseen happens and your repayments can’t be done…,” he says.
Wikus says that we have to beware of informal guys around the corner next to the spaza shop. They don’t do affordability checks and sometimes they charge too high interest rates – unawares to the public.
A debt spiral – most of the people who find themselves in debt, started with micro loans.
Make sure you REALLY need it and if you can afford it to pay immediately.
Listen to the UNISA Radio interview below.