Can loan apps sue you when you default? 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 up 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 are giving 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, there are some legal actions that the loan companies can take against you based on the terms and conditions that you signed up for. The actions depend on certain factors either the loan app is regulated by the government or they are just one of those loan sharks in the space.
In this article, I’m going to answer certain questions if loan apps 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 be able to borrow short-term quick and emergency loans on interest. Some of these loan apps include Carbon, Renmoney, JumiaOne, and Alat by Wema among others.
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 is expired.
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 days 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 and so operate against federal government financial directives on loan business.
Loan sharks cannot sue you when you default to repay 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?
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 refused 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 their loan, and when all options are exhausted, they can sue you in court.
The judge is responsible to decide 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 the question of “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?
If you borrow money with an online loan app, 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 are required to 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 try to 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 would be reported to Credit Bureau which reduces your creditworthiness.
Furthermore, your loan amount would 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 would find you worthy of a loan anymore.
Every single day that goes passed by without you paying your loan back would drop a certain score in your loan credit score. Furthermore, your loan amount would 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 with any other loan company. If you currently are facing that, see how to remove your loan BVN from the blacklist in Nigeria.