Loan Apps In Nigeria, Loan Sharks And High Interest Rates

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LMA Team presents to you Loan Apps In Nigeria, Loan Sharks And High Interest Rates. Because of its multiple advantages, like as tailored repayment plans, minimum documentation, and low-interest rates, online lending apps are quickly gaining popularity.

The topic of excessive interest keeps coming up, especially anytime the increasingly famous loan apps regime is mentioned, which is why the Central Bank of Nigeria (CBN) regularly issues a policy statement on deposit money banks lending rates.

However, the growth of quick loan applications in the country as a means of generating emergency stop gap funds, which was prompted by the country’s poor economic position, joblessness, and resulting poverty, has transformed the borrowing dynamics completely.

Faceless loan sharks, some of them are owned by Chinese shylocks and are hosted on Google Play Store and Apple Store, have entered the digital arena, swindling poor and innocent Nigerians out of their hard-earned cash in the form of loan credit.

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Many quick lending apps and platforms have moved to collecting service fees that are nearly half of what they are giving out as loans in order to appear to be strictly conforming to the CBN’s direction on interest rate charges.

Some of these loan applications charge a low interest rate while charging a very high service fee. As an example, take a look at the image below.

A borrower wishes to borrow $13,000 with the expectation of repaying $18,668. Despite the fact that they state the interest rate is only #91, their service cost is #5,577.

Why charge nearly #6,000 in service fees for a loan of $13,000 is the question now.

Another anomaly observed in some loan applications is the unethical practice of advertising the amount a borrower is eligible to borrow and claiming that it is interest-free, but when the money is disbursed, it is less than what is represented.

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Credit Loans High Interest Rates

This loan app (Credit Loans) is depicted above giving out a loan of $13,000 and charging a combined cost of $5,668, which we believe is excessive. The total fee is over half of the amount to be borrowed.

The majority of these lending applications bind their users to a 7-day repayment period, which is in violation of Google’s loan app tenure policy.

“We do not allow apps that promote personal loans that need payback in full in 60 days or less from the moment the loan is given (we refer to them as’short-term personal loans’),” according to one Google Play Store policy statement.

However, in Nigeria, 70% of loan applications are breaking the rules, and we anticipate Google to enforce the regulation and show these apps the way out.

We’ve previously blogged about some of these infringing loan apps, but we have yet to see Google Play take any action or enforcement against them. NCash, Sokoloan, PalmCash, 9credit, GotoCash, Cash Wallet, ForNaira loan apps, and a slew of others are all involved.

iCredit High Interest Rates

iCredit is another app that has been revealed. As you can see in the figure above, they charge over half of what they give out in loans. They charge a fee of $1,400 for a loan of #4,000.

Fast Money High Interest Rates

Another program that overcharges its users is Fast Money. Fast Money is charging a total cost of $2,800 on a $6,000 loan, as shown in the graphic above. This is more than just exploitation.

People will always desire a quick loan, especially now that the country is struggling economically, and it is up to regulatory bodies and the Google Play Store, where the majority of these loan apps are stored, to ensure that borrowers are safeguarded.

Users are recommended to constantly double-check the legitimacy of these mobile applications before sending money to them. Also, read their terms and conditions carefully, and always leave a review after completing the loan application procedure.

Exploitation of unwitting borrowers appears to be the norm, and authorities aren’t helping matters. This is a wake-up call for the CBN and other regulators to investigate the operations of these loan applications before they wreak even more devastation.

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