Can loan apps sue you when you default to them? Or can you go to jail for not paying a loan company? These questions have come up on our social media content, and we decided to answer them once and for all about the legal consequences of not paying your loan to a loan company on time.
If you have ever taken an online loan in Nigeria, you’ll agree with me that there are hundreds of loan apps out there that give genuine loans to customers. Also, there are bad and unserious customers out there who love to take a loan from a loan company and not pay it back when it is due.
When this happens, the loan companies can take some legal action against you based on the terms and conditions that you signed up for. The actions depend on certain factors: either the government regulates the loan app, or they are just one of those loan sharks in the space.
In this article, I’m going to answer specific questions about loan apps that are capable of suing you when you default to pay your loan or whether you can go to jail for it or not. Let’s begin.
What Are Loan Apps?
An app is considered a loan app when you download it from the respective app store and are able to borrow short-term quick and emergency loans on interest. Some of these loan apps include Carbon, Renmoney, JumiaOne, and Alat by Wema.
There are also bad loan apps that would go all out to tarnish your image when you fail to repay your loan when due. Some can even start embarrassing you a few days before your loan expires.
Read also: How To Stop Loan Apps From Sending Messages To Your Contacts
When Are You Considered A Loan Defaulter?
When you take a loan from a loan company, you are given a specific period of time to return that money to the company after solving your own emergency.
However, this period is usually not enough. Some loan companies give loans to low-income earners and expect them to be paid back in 7 days, 14 days, or even within 21 days. Now, for someone who is a trader, this might be possible, but for those who earn salaries and wait for a 28th-day cycle, this can be unrealistic sometimes.
At this point, if you fail to repay your loan a minute or hours after your loan tenure, you are considered a loan defaulter and need to do everything to pay back your loan amount.
Can Loan Apps Sue You When You Default?
In Africa, loan apps are creating unpleasant experiences for low-income borrowers by harassing them on social media and sending defamatory messages to their contacts. This has led to a rise in the question asked by many lenders: “Can loan apps sue you when you default” to pay your loan?
The simple answer is that a loan app or loan company can sue you when you default to pay your loan only when the loan app or company itself is legal. Many of the loan apps are illegal and unregulated, so they operate against federal government financial directives on loan business.
Loan sharks cannot sue you when you default on repaying your loan. However, they can prevent you from taking a loan the next time with them since you owe them. A loan company can also report your BVN to a credit bureau report agency to alert even legitimate loan apps from granting you a loan.
Which Loan App Can Sue You When You Default?
Some of the most popular legal loan apps that can sue you when you default are “The Renmoney loan app, Fairmoney, Aella Credit, Quick Check, Quick Bucks, Carbon loan, Migo loan,” etc.
Those apps are legally registered and regulated by the federal government of Nigeria under all standing operating procedures (SOP) and can be trusted.
However, it is very difficult for these loan apps to sue you for smaller loan amounts. When you refuse to pay a loan of N10,000, and it gets penalty fees, late fees, and other surcharges, it can turn to N1,000,000 in months or years, depending on how long, and at this point, a loan company can sue you to recover their money.
Can You Go To Jail For Not Paying A Loan Company?
Can you go to jail for not paying a loan company? A loan company can not put you in a cell. However, when you default to pay your loan money, a loan company can use different means to try to recover the loan, and when all options are exhausted, they can sue you in court.
The judge is responsible for deciding whether you should go to jail for not paying your loan or pass another judgment against you. Whatever the judge finds worthy as your punishment is what you would serve.
So, “Can you go to jail for not paying a loan company?” is yes. You can go to jail when found guilty of an accusation labeled against you by the loan company before a court of law.
What Happens If Online Loan Is Not Paid in Nigeria?
Suppose you borrow money with an online loan app. In that case, you are usually given a period of 7, 14, 21, 30, 60, or 90 days to repay your loan, depending on the company you are borrowing with and their borrowing terms and conditions. You must repay your loan on or before the end of your loan tenure, while some require installment payments until it is completed.
But when this online loan is not paid, the loan sharks will start sending defamatory messages to your contacts on WhatsApp and SMS to let them know that you are a fraudster and on the run with company money, and the general public is hereby advised.
This can be very embarrassing, and you are advised to either avoid such loan apps or pay your loan within the agreed time period to avoid such embarrassment.
The legitimate loan apps in Nigeria can take you to court and sue you for breach of agreements and send you to jail for not paying their monies. Another interesting disadvantage of not paying a loan company on time is that your credit score would drop. Your BVN will be reported to the Credit Bureau, which will reduce your creditworthiness.
Furthermore, your loan amount will continue to increase, and other penalties might be included in your final repayment amount. Some loan apps would increase your penalty surcharge as high as 20% every time you don’t repay.
What Happens If You Borrow Money And Don’t Pay It Back?
When you borrow money from a loan company and don’t pay it back at all, you get yourself to be blamed in the long run. What happens is that you will lose your creditworthiness to that loan app, and no other loan company will find you worthy of a loan anymore.
Every single day that goes by without you paying your loan back would drop a certain score in your loan credit score. Furthermore, your loan amount will continue to increase, and other penalties might be included in your final repayment amount. Some loan apps would increase your penalty surcharge as high as 20% every time you don’t repay.
In A Nutshell;
A legitimate loan company or loan app can sue you in court, and when you are found guilty by the judge, you can go to jail for refusing to pay your loan amount at the required time based on the terms and conditions that you agreed with before taking the loan amount.
When you take a loan in Nigeria and don’t pay it back, your loan amount will accumulate further charges such as late fees or penalties, reduce your credit score (creditworthiness), and prevent you from borrowing from any other loan company. If you currently are facing that, see how to remove your loan BVN from the blacklist in Nigeria.
