Many people are exposed to the dangers of loan apps in many ways. Loan apps can be a lifesaver at some point in life however, this does not mean that they do not also have their own disadvantages. In this article, I will be listing out the top 5 dangers of loan apps in Nigeria and why you shouldn’t use loan apps to borrow money even if you really need to get a loan.
But if you have, remember to check out our blacklisted loan apps in Nigeria and try to avoid them by all means.
What are loan apps?
A loan app is any mobile application that you can use to borrow money from the comfort of your home. Most of these loan apps don’t require collateral or documents which is why people love them and also run to them to borrow money to solve their immediate problems.
In other words, Mobile technologies called loan apps allow you to apply for a loan without ever stepping foot inside a bank. A personal loan may be advantageous for you if you require money to finance a significant purchase, pay a bill that is overdue or consolidate debt.
However, they are some disadvantages to getting a loan from any of the loan apps available on the internet, and in this article, we will be discussing all of them, so continue reading to find out everything you need to know.
Online Loans vs. Bank Loans
Traditionally, bank loans have been used for larger purchases like mortgages and cars. As a result, the approval procedure is more stringent and calls for additional supporting documentation to verify a borrower’s capacity to pay back a significant sum.
Online loans, on the other hand, merely need identity documents and can be authorized in as little as 24 hours. The maximum loanable amount, however, is far lower than what a borrower may be eligible for if they applied for a loan through a bank.
Top 5 Dangers of Loan Apps in Nigeria
One of the major dangers of borrowing from loan apps is that it can become an addiction, therefore, it will become hard to stop, and then at a particular point, you may not be able to pay back which also led to another problem.
Addiction is a situation that you don’t want to find yourself in as a borrower. You should learn to take care of your responsibilities in other ways rather than always borrowing.
You should probably take a second job or venture into any petty trading to save more money and avoid being addicted to borrowing.
2. Extremely high-interest rate
Many people complain a lot about loan apps having high-interest rates. However, this is not a lie many loans app in Nigeria charges more than 10% which is the supposed legal interest rate.
This has become a danger in the loan app industry as lenders are forced to pay at least 10-60% interest rate with these loan apps.
The reason for the high-interest rate of many loan apps is not known, maybe it’s because documentation or collateral are not needed for you to get the loan and they are probably not monitored by the government or Central Bank to make the rules and regulations.
3. Victim of Internet fraud.
To get a loan from any loan app, you would be required to fill in your personal information which may also include your BVN.
Uploading your personal and private information in some of these apps can be a very risky thing to do because it could be sold out and used by cybercriminals. Sometimes, these cybercrimes could be calling you to send out your ATM card details including 4-digit pins and CVV numbers.
This has been a challenge that even the government has not looked into in recent times pasts. Fraudsters can even use the information you provide to target your social media handles and hack your accounts or just engage you in a conversation in an attempt to defraud you in any way possible.
Be careful of which loan app you borrow from and what rights and information you provide to them during your registration and request for a loan.
4. Limited borrow amount
Another danger of loan apps in Nigeria is the fact that the amount you can borrow with these apps is usually very limited and sometimes can’t cover your needs except you have to sign up for many apps at once.
With the loan app, you can’t borrow a lot of money that can be used to either build a house or buy something meaningful. Their borrow limit is actually very low with a high-interest rate. This is another disadvantage and danger of loan apps in Nigeria.
For example, Migo loan can qualify you to borrow only N5000 for the first time and try to increase it gradually going forward depending on your repayment history. Some others can even give you just N2000 or less which is equivalent to nothing compared to the challenge you intended to solve.
5. Defamatory Messages
One of the worse dangers of loan apps in Nigeria is the harassment, defamation, and invasion of lenders’ privacy by loan apps.
It is no new thing that people get a lot of disturbing phone calls and messages if they do not have the money to pay at the set date or worst-case scenario, before the expiration of the loan tenure.
Your family and friends will also be called and frightened with texts and WhatsApp chats that seem to blackmail you as you’ll be labeled a fraudster. This is very bad especially if you still have the intention to pay back but do not have the money at that particular time.
These are some of the top 5 out of many other disadvantages of loan apps in Nigeria. Considering the Top 5 Dangers of Loan Apps in Nigeria, it is advisable that you don’t always borrow from loan apps to avoid disturbance and embarrassment and so you don’t get addicted to always borrowing money.
However, depending on the case, you can borrow money from them but ensure that you borrow what you can easily pay back.