After we wrote this article, Instant Loan Apps in Nigeria: Compare the Best Options, where we explained how to find the Perfect loan app for your needs.
We find it important to really let you know what these loan apps are really doing exactly.
Instant loan apps have become increasingly popular in Nigeria in recent years, offering a quick and easy way to get the money you need in a pinch. But how do these apps work, and what are the risks involved?
In this blog post, we’ll take a closer look at how instant loan apps work in Nigeria and discuss the pros and cons of using them. We’ll also provide some tips for borrowers who want to use these apps safely and responsibly.
So whether you’re considering taking out an instant loan or are you are just curious about how they work, read on for the inside scoop!
As earlier stated that Instant loan apps are increasingly popular in Nigeria due to the ease with which people can access loans from them.
They can easily be downloaded on any smartphone, and with just a few registration details, money will be disbursed to one’s bank account.
No doubt, loan apps do provide some succor to Nigerians, especially to meet financial emergencies, but care should be taken to avoid using loans to fund one’s lifestyle, as most loan app operators have been reported to use less than civilized methods to recover their money from defaulting borrowers.
Instant loan apps in Nigeria are largely unregulated, and most of their loan terms are extortionate, with repayment periods starting at just 7 days and very high interest rates.
Here are some facts about how loan apps operate in Nigeria.
Can Instant loan apps block my BVN?
No, loan apps do not have the ability to block anyone’s BVN. Biometric Verification Number BVN is a unique 11-digit number that identifies every Nigerian as they interact with the country’s financial infrastructure. The number is given and controlled by the CBN in association with licensed commercial banks.
Only the CBN can blacklist your BVN in cases where you have seriously violated the country’s laws. Loan apps, however, can block your BVN on their app and even prevent you from getting loans from other loan apps if you default on your loan repayment.
Some loan apps have the ability to report your BVN to credit bureau agencies, which can in turn blacklist you as a loan defaulter and prevent you from getting a loan from other lenders.
What happens if I can’t repay my instant loan apps’ loans?
Most loan apps will disturb you with persistent calls and SMS, some will call the guarantor’s phone number you provided during registration.
They will also try to auto debit the ATM card you have linked to your profile.
Eventually, when you fail to repay your loan after a long period, most loan apps will report your BVN to the credit bureaus and hand over your profile to a loan recovery company that will try to recover the loan on their behalf.
Can I go to Jail for not repaying online loans?
No, you cannot go to jail for defaulting on your instant loan apps repayment. The loan company wants their money, and when you’re in jail, you definitely can’t repay. Some loan sharks have been known to threaten their customers with lawyers and jail terms; they cannot send anyone to prison. The only thing they can do is report your BVN to credit bureaus to prevent you from getting further loans.
Why do loan apps ask for BVN?
The BVN number is a unique identifier linked to every transaction performed in Nigeria. Because every Nigerian only has one, it makes it easier for the instant loan apps to identify loan defaulters and deny them loans. You cannot change your BVN; if it gets reported to the credit bureaus for default, the only way to clear it is to pay all outstanding loans.
Are loan apps legal in Nigeria?
Most instant loan apps available on the Google Play Store are not legally registered and regulated by the CBN as microfinance institutions. A handful, like Palmpay, Opay, FairMoney, and Carbon, are recognized by the CBN.
How do I block these Instant loan apps?
You probably want to prevent the loan app from removing money from your bank account without your consent. After binding your ATM card to your profile, the only way to prevent this is to block and deactivate the ATM card. You can do this through your bank’s app or by simply going to your bank to block your card and request a new one.
Changing your card password does not stop auto-debit. Also, loan apps can still auto-debit your bank account after they’ve been deleted from your phone.
Can Instant loan apps access my contacts even after they are uninstalled?
Yes, they still have your contacts; you grant them access to your contacts when you first download the app, and most loan apps make a copy of your contacts immediately.
You can still prevent defamation by deleting your WhatsApp picture or limiting access to it to only your saved contacts by changing your privacy settings.
Most loan apps that defame people usually get their pictures from the WhatsApp profile.
Which loan app has the lowest interest rate in Nigeria?
Branch, Carbon, Kuda, and commercial bank’s apps have low interest rates. The interest rate on loan apps is not uniform; it is influenced by factors such as the credit score and repayment history of each individual borrower.
If you have further questions related to loan apps in Nigeria, leave them in the comment section below and check back on this webpage for updates.
I did not request a loan, yet money was disbursed to my bank account. What should I do?
Sometimes, some instant loan apps disburse money into a customer’s bank account who did not request one, or a customer might fill out the form and later change their mind due to the high interest rate or short repayment tenure, yet money will be disbursed into their accounts.
If you are experiencing something similar, immediately deposit the principal amount that was sent to your bank account to avoid paying interest on it later.
I mistakenly overpaid more than I borrowed from a loan app, what should I do?
Maybe you’re supposed to pay back N12,000, but you mistakenly sent N120,000 to the loan app’s account. In such a situation, you should request another loan in the amount that you overpaid. That is N108,000 in this example. It is usually difficult to get reimbursements in such cases, which is why you should be very careful and double-check before confirming any transaction.
I repaid my loan, but the loan app did not increase my loan amount?
It is standard practice that most instant loan apps increase the loan amount for their customers when they repay on time, but they are not under any obligation to do so. There are a few reasons why a loan app might not increase your loan amount even after you repay on time:
Their loan limit: Most loan apps have a loan limit, and they cannot borrow you more than that amount. For example, if the loan limit on an app is 50k, they will not increase your amount even after you have repaid your previous 50k on time.
Availability of funds: loan apps have certain amounts they have programmed their computers to borrow from customers; the system might limit your loan amount if their are plenty of other borrowers also applying. So your loan amount might not increase through no fault of yours.
Loan history with other lenders: Your loan amount might not increase if you have outstanding loans with other lenders or have refused to pay them on time. Your general loan history can affect your loan amount because loan apps want to do everything to be sure that you will pay them back on time.
How do I report a Nigerian loan app?
Most of the online loan apps that operate in Nigeria do so without licenses or regulation from any government agencies. In cases of serious rights violations, you can, however, file a complaint with the Federal Competition and Consumer Protection Commission (FCCPC). They are the government agency for customer rights protection in Nigeria, and they have been known to take down erring loan apps in the past.
If you have any further questions, you can leave them in the comment section below. This article will be updated with new information.
Do loan apps ask for upfront processing fees?
There are some loan apps, like To U loan that will ask you to pay an up-front processing fee before they will disburse the loan to your account. These apps are fraudulent and designed by scammers.
Once you pay any processing fees, they will cut off communication and just keep your money. Legit loan apps don’t ask for any payment before disbursing loans. If there are any processing fees, they will be deducted from the loan amount disbursed to your bank account.