While signing up on the App to get a loan, the customer is sharing all their data with the company, mostly, his or her contacts.
Eberechi Obinagwam
Loan Apps recently became a trendy business in Nigeria when the Chinese dominated the market.
But before its emergence when there were no Loan Apps, no Fintech companies, Nigerians suffered so much to get loans from banks, especially because of the lack of acceptable collaterals.
Then came LAPO with relatively flexible conditions for loan acquisition, but also stressful because it requires collateral in addition to some remarkable persons to sign as sureties. And by the time you finished meeting up with the conditions, one is already stressed out. And to add to that, it is difficult to go through this process when what you need is just about N5000 to 20,000. So, going to financial institutions to borrow money would mean that you have a project you want to embark on or business or something cogent that you need money for.
But today, with the sudden emergence of online loan firms which are mostly owned by the Chinese, accessing loans has become easy. People freely borrow short loan to meet their various needs. For business, for transportation to work, to save life or for emergencies. Some even borrow to pay bills in a bar, or to settle debit. A customer ones said he patronizes Loan Apps when he is out for a drink with friends.
The various reasons why people borrow cannot be weighed. And the high rate at which Nigerians patronize Loan Apps today can only be attributed to service delivery, economic hardship and poor governance in the country.
The economy of the nation has not been favorable to its citizens even at 62 years of independence, so people opt for loan for survivals. Unlike other developed worlds where their government provides them with grants with ease, it is not so in Nigeria. Even if there is, it is not accessible by all.
And because the online loan apps are easily accessed, Nigerian’s prefer to borrow than beg for money from relations, family, or friends or even seek for government’s grants if there is any.
Online Loan Apps has no doubt made it easy for millions of Nigerians to access loans whenever and wherever. With your working Android mobile phone you need not beg for an ‘urgent 2k’. All you need to do is go to Google for Loan Apps, then go to playstore and download your desired Loan App. Then click on Apply. Fill in the necessary details then send. And within 10-30 minutes you have received your cash.
There are loan companies that offer seven days loan, 14 days, a month and more. However, their duration increases as the company keeps growing. They offer 2, 3 to 5 percent interest, with 2, – 5 percent overdue charges.
Fairmoney Loan App offers a month and more duration, with the same or low interest.
Quick Money, Easeloan, Okash, Hicash, 9Cash, etc offer from seven days to fourteen to minimum one month duration.
What you need to know before borrowing from Loan Apps
While signing up on the App to get a loan, the customer is sharing all their data with the company, mostly, his or her contacts.
When you click on ‘allow access to contacts, all your information gets to the loan company.
Also, a customer inputting his or her BVN is a go ahead to accessing your correct information. So, when customers come and complain that loan companies are reaching out to their contacts without permission, they forget that they gave the go ahead earlier.
A loan firm has two important units, the verification and debit recovery units. However, there is a disbursement unit, but, it’s most times handled by the Chinese.
The verification units check all contacts provided by the customer, verifies the customers given address, put a call through to provide contacts to know if the contacts provided by the customer are effective. But these steps are done in some loan firms for only first time customers alone.
In most loan firms, once you have input your details on the App, and you are taking the loan for the second time, the app credits you without verifications. All you just need is download the app on your phone, fill in the necessary information, most importantly, your BVN.
However, some Apps require you fill in a running account while they verify if money regularly comes in, while some go to the extent of checking the highest money and the minimum money you have received or receives from the account to determine how much to disburse to you.
Some loan apps requires you link your account with them. The linking enables them run an auto debit to the customer’s account if he or she fails to pay on due date. But this is not without the customer’s permission. Although, some customers claim not to be aware, forgetting that they sign to it while clicking yes to every questions asked while applying for the loan. But, because most customers are in a hurry or are in emergency, they don’t read even the terms and conditions of the loan.
While applying for a loan, no matter how emergency it is, it is important you read the terms and conditions of the firm you are applying from and watch carefully what you are clicking yes to so that it does not result to a big issue for you while paying back.
The issue of reading and understanding the terms and conditions of each App is vital because that is where the problem between a customer and the loan company starts.
Problem starts when a customer is not able to pay back on his or her due date and leaves it for a day or more and returns back to pay the same amount collected without paying the interest. Or a customer saying he does not know that he has to pay interest after being overdue, or saying that he is not going to pay, or being rude to the Loan App agent.
So, the Loan Recovery officer does his or her job to reach out to the customer to pay, and in a situation where the customer does not pay or responsd positively to his or her payment, the debit recovery office reaches out to customers’ contacts.
And because most times, these debit recovery officers needs to do the job they are being paid for, they go extra mile by reaching out to the customer’s contacts in different manner. It could be through threat messages, sending of pictures with a harsh caption, especially for stubborn customers that does not want to pay back in peace. In as much as the company understands that unforeseen issues may arise, they also expect customers to understand that they run a business and if the money is not paid they will be out of business.
Loan companies lose a whole lot. Customers that don’t pay at the end are tagged bad debts. Like when customers who take the loan die or fake their deaths, or are hospitalized. And without collateral, the company automatically loses.
Loan companies in recent times have been faced with the federal government saying that reaching out to debtor’s contacts is illegal. In fact, the ruling has given most Nigerians the privilege not to pay back their loan on time or not even pay at all.
There are some that take loan with the intention of paying back at stipulated time, but some don’t. There are some individuals who feel the company will do them nothing if they do not pay back as it is an online loan so they apply for loan with the intention of not paying back. So, when they fail to pay back, the company runs an auto debit to their linked account. But loan companies do not run auto debit to customers account if customers account is not linked.
Another issues that arises between a customer and the company is payment method. Most of these soft loan companies operate with a middle agent that receives payment made through the App called ‘Paystack’ and when it’s not seen or received by the loan company, the customer that made the payment will not be cleared. Most of these issue arises from network issues.
And some App sets their virtual account to receive only the exact amount and when a customer pays excess of what he or she is supposed to pay or pays less, the App rejects it, hence the reason why most of these soft loan Apps provide an offline account. The offline account is better because when you pay you get a debit alert which you send to an account officer attending to you and he or she works on it to get you cleared.
However, paying offline is fair because the company has access to the account compared to the one made through the app where the paystack receives on their behalf.
Meanwhile, while taking loans from the App, be rest assured that your data and contacts are exposed. Be ready to accept insults when you do not pay on your due date because a borrower they say is a slave to its lender.
