Marketed as an alternative to banks, Lendico promises borrowers cheap loans and investors attractive returns.
Lendico is approved by the National Credit Regulator (NCR) and is a subsidiary of Africa Internet Holding (AIH).
Cellular companies Millicom and MTN, together with Rocket Internet, hold equal shares in AIH.
Lendico’s major local rival is social lending marketplace RainFin.
CEO of RainFin, Sean Emery, said he was surprised that it had taken so long for a rival to emerge. He said Lendico’s entrance confirmed that the market had legs.
“From what I can see, Lendico is using the exact same model and credit score-carding company that they use in other markets. They will have to modify it, as the South African environment is unique, but I hope it works,” Emery added.
Loans start at an annual percentage rate (APR) of 7.92% and range anywhere from R3 000 to R200 000.
The minimum investment is R250, while the maximum investment depends on the type of account the investor has selected, with the option to upgrade to a higher-volume account.
Lendico promises returns of up to 27.39%.
The service charge for investors is 1% and for borrowers ranges between 1.25% and 4%, depending on the length of the loan, which could be anywhere from 12 months to 60 months.
Emery confirmed that RainFin was expanding into other categories of loans, such as loans for small- to medium-sized enterprises.