How to apply for a loan online safely: a step-by-step checklist

Why does online loan safety matter?

Online applications ask for personal and financial details, and criminals know it. The National Credit Regulator (NCR) has warned that fraudulent credit providers copy the details of real, registered ones and try to make you believe that a government body such as the NCR endorses them.

The South African Banking Risk Information Centre (SABRIC) adds that most digital banking crime today starts with social engineering, in which criminals use trust, urgency and a convincing voice or message to get you to hand over your own details. In other words, the weak point is usually a conversation, and not your bank's systems.

A few checks before you apply close most of those doors. They take minutes and cost nothing.

How do you verify the lender before you apply?

Start with registration. Under the National Credit Act, anyone who lends money and charges interest must register with the NCR as a credit provider, irrespective of the size of the loan. The NCR keeps a public register that you can search by name or registration number.

Do not stop at finding a number on the lender's website. The NCR explains that a fraudulent provider can use a legitimate provider's registration number and list business premises that do not exist. Match the name, address and phone number on the register with the company you are dealing with, and use contact details you found yourself, not the ones in an unexpected message.

Our guide on how to check that a lender is NCR registered takes you through the search step by step.

• Find the lender's full legal name and registration number on its website, quotation and agreement.
• Search the NCR register and confirm the lender appears as currently registered.
• Compare the name, address and telephone number with what the lender shows you.
• Be careful with a lender that only contacts you through WhatsApp, social media or a personal number.

How can you tell that a website is safe to use?

Type the lender's address into your browser yourself or open it from a source you trust, instead of tapping a link in an unexpected SMS, email or chat message. SABRIC's advice for banking is to avoid clicking links or icons in unsolicited email, and the same habit protects you on a loan website.

Look for the padlock and the 'https' at the start of the address before you type anything personal. A padlock shows that the connection is encrypted. It does not prove that the company behind the site is honest, which is why registration still has to be checked separately.

Do not install an app because a caller or a message told you to. SABRIC advises installing apps only from the official app store of your phone and never at the request of a call or message, because criminal software often presents itself as a 'security' or 'verification' tool.

What should you never share with a lender?

Never share your card PIN, your one-time PIN (OTP) or your online banking password with anyone. SABRIC advises that you memorise your PIN and never share it with anyone, not even a family member or a bank official, and that you do not give an OTP to anybody over the phone.

A lender may ask for your name, ID number, contact details, proof of income and bank statements, because it has to assess affordability. It has no need for a PIN or password. If a form or a caller asks for them, stop.

The NCR also warns against leaving your bank card, SASSA card or ID with a lender. In its words, it is illegal for a credit provider to take or keep these instruments when granting credit, and the conduct is a criminal offence under the Act. If it has happened to you, ask for them back and report the matter to the NCR and the police.

Why should you never pay a fee before getting a loan?

The NCR says the National Credit Act does not allow credit providers to request upfront payments for the release of a loan. A request for an 'admin fee', 'insurance', 'verification fee' or 'processing fee' before the money reaches you is the classic sign of fraud.

If you have paid an upfront fee to a fraudulent provider, the NCR advises opening a criminal case with the South African Police Service. It also notes that you are unlikely to get the money back, because such providers do not exist in the real world. Report the lender to the NCR so that others are protected.

Real costs, such as the initiation fee, the service fee and interest, are shown in the quotation and are added to the loan. They are not collected separately before the loan is paid out.

What should you read before you agree?

Before you sign, the lender must give you a pre-agreement statement and a quotation. The NCR's consumer guide says the quotation must include the principal debt, the interest rate, the total amount payable under the agreement, the instalments and all fees, charges and interest, and that it is valid for five business days. If the lender signs the agreement within that period, it must do so at the rate and costs shown in the quotation.

You also have the right to receive documents in plain language and in an official language you understand. The NCR advises that you do not sign unless you understand the terms. If a line is unclear, ask the lender to explain it in writing.

Check the total repayable in rands, the number of instalments and the repayment date. Credit life insurance, if any, should appear in the total cost too. Our guide on how to compare loan offers shows how to lay quotations side by side.

• Total repayable, in rands, from the quotation.
• Interest rate and whether it is fixed or variable.
• Initiation fee, monthly service fee and any insurance premium.
• Date and amount of each instalment, and how payment is collected.
• What happens if you pay early or miss a payment.

What does a normal online application look like?

The detail differs from lender to lender, but the general steps are similar. You fill in a form with your personal details and the amount you want. You provide documents such as your ID, proof of income and bank statements. The lender assesses whether you can afford the loan, then tells you its decision and sends the quotation and agreement.

If the lender says yes, you receive the paperwork to read and sign, and the money is paid to your bank account on the terms in the agreement. If it says no, you have the right to be given reasons. At no stage does a lender have to ask you for money first.

Some lenders describe their online process as streamlined or quick. Those are the provider's own words, and the timing is the lender's to confirm. What you control is the time you take to read and check, and nothing on this site, including the lender pages, promises a decision or a speed.

Mzansi Hub does not take loan applications and does not make credit decisions. Where a lender page has a link to check an offer, it opens the lender's own application journey, and we may earn a commission if you apply through it. The lender decides, and the price to you does not change.

Which red flags mean you should stop?

The NCR's warning gives a useful list. Be cautious with unexpected calls, emails and messages even when the person knows your name. Watch for a 'clone' company that copies a real lender's name. Do not be pressured into acting quickly, because a genuine provider will not mind you waiting to compare costs on a quotation.

Be especially careful with lenders that skip the affordability assessment. The NCR advises against engaging with providers who do not conduct one, and says you should always disclose your financial obligations and living expenses honestly, because a lender that cannot see the full picture cannot lend responsibly. Giving false information can also cost you protection under the Act.

• A request for any payment before the loan is paid out.
• A request for your PIN, OTP or banking password.
• A demand that you hand over a bank card, SASSA card or ID.
• No registration number, or a number that does not match the register.
• Pressure to decide today or messages from a personal number.
• No quotation, or a quotation that is missing the total repayable.

What records should you keep, and where do you complain?

Keep copies of what you submit and what you receive: the application, the pre-agreement statement and quotation, the signed agreement, and any messages. Store them somewhere you can find them in a year's time. Save the reference numbers of any calls.

If something goes wrong, contact the lender first and put your complaint in writing. If you cannot resolve it, the NCR takes complaints about alleged contraventions of the National Credit Act on its call centre number, 0860 627 627, and by email. If your bank card or login details may be exposed, call your bank immediately on its official number.