In recent years, there has been a steady increase in the number of loan platforms available to Nigerians to take out easy loans. As much as this benefits loan takers across the country, we cannot deny or ignore the fact that it has also increased the chances of loan defaults.
In earlier times, the difficulty associated with accessing easy loans could be linked to problems loan platforms might have faced with recovering loans. And even now, years later, the difficulty of recovering loans remains with numerous loan platforms spread across the country and at our fingertips.
What Happens If Online Loan Is Not Repaid In Nigeria
With this difficulty comes the critical question – do loan defaulters get away quickly without having to repay their loans? Depending on who you ask, the answer to this question might vary from person to person. Many have said it is easy to get away without repaying your loans if you ignore the platforms long enough; others have recounted all they had to go through for defaulting on their loan. Are there any repercussions for defaulting on a loan set in stone? The effects of not repaying an online loan in Nigeria may differ from platform to platform. Some of them are:
- Added Charges: This is a prevalent option with loan platforms in Nigeria. On defaulting your loan, interest and late fee charges will be added to your loan daily till you can repay your loan.
- Suspension of account: Suspension of your account on the loan platform may also occur if you default on your loan. This is to stop you from making any other transactions.
- Harassment: Some loan apps require users to grant access to their media and contacts before they can use the app. Loan apps can use this access to infiltrate the contact list of borrowers and then send warning and harassment messages to the friends and family of the borrower. This is illegal, but it is a measure taken by loan apps to frustrate or harass borrowers into repaying their loans. An example is that of a man who went through a series of harassment after defaulting.
- Lowering credit rating: Failure to repay your loans will reduce the borrower’s credit score and creditworthiness. This will prevent you from accessing future loans from any other financial organization.
- Arrest: This is usually the last resort for most loan platforms, as defaulting on a loan is not a criminal offense but a civil matter. If the issue is dire enough, it may lead to a court case and jail time.
Why Do Nigerians Fail To Repay Their Loans
Why do people take out loans only to refuse to pay them back, you may ask? Below are some reasons the average Nigerian might default on a loan:
- The increased cost of living: While we can all agree that repaying a loan is a crucial responsibility for the borrower, we cannot ignore the country’s economic state. Inflation has hit the prices of all basic living needs – food, rent, fuel, clothing, and even gadgets. This puts more stress on the net income of average earners and might be a factor that causes loan defaults.
- Financial Illiteracy: CBN reported that 53% of Nigerians do not have an account of their weekly or monthly expenses. This makes it difficult for borrowers to structure their finances properly and determine what amounts they can loan comfortably.
- Ignorance: Many loan defaulters are unaware of any grave consequences associated with not repaying a loan. This permits many borrowers not to take repaying a loan seriously.
Also, read: does Piggyvest give out Loans?
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