Everything You Need to Know About Quick Loans in Nigeria
Quick loans are no doubt very handy and helpful on rainy days. And there are periods within a month when one’s salary is never enough and as such, one would need to fall back on a quick fix – a quick loan that would sooth one’s urgent needs.
Quick loan services have moved from traditional lending ways to more trendy methods in Nigeria. The best part of it all is one could access this type of loan without having to visit a physical office as opposed to what was obtainable some ten years ago!
In this post, we have detailed everything you need to know about loans, quick loans, their characteristics and dangers that come with them. However, if your interest is on quick loan providers in Nigeria, then read this through before proceeding to that. We have also detailed everything you need to know about TradeMoni – Nigeria’s interest-free loan.
What is a Loan?
A loan is an operation whereby a financial institution – be it a bank or another financial institution – makes a certain amount of money available to the applicant.
With the loan, acquired facilitated capital also assumes the obligation to repay the capital in a period of time set plus commissions and interest agreed with the financial institution.
The capital and interest will be returned in a number of installments that can be monthly, quarterly, semi-annual or annual, as determined in said contract signed before a notary.
Basic Loan Terminologies
The bank loan is a type of contract that uses terminology that, in many cases, is difficult for the user to understand, but it is necessary to manage to understand what is being hired. These terms are:
Main: It is the amount of money loaned by the entity, on this amount it is on which the interests to be paid by the applicant are computed.
Interest of the loan: It is the amount of extra money that has to be returned to the bank or financial institution in exchange for the concession of the borrowed money. The way to return interest is also agreed by contract.
Term or Tenor: It is the period of time that the entity grants to the user to return the loaned amount plus interest and commissions.
Lender: The person or entity that lends the money.
Quick loans are a type of consumer credit that is contracted for relatively moderate amounts of money in exchange for more unfavorable payment conditions, that is, in exchange for higher interest rates.
Quick loans are a type of loan that does not usually involve the payment of opening fees but the interest that is applied ranges between 20 and 25% APR. Its repayment period is usually around 60 months. To obtain a quick credit you can go to a private company or to a bank or financial institution that offers more security and guarantees to the user.
Documentation for Quick Loans in Nigeria
To obtain quick loans in Nigeria, you are usually only asked to provide your Bank Verification Number (BVN), a valid ID card and bank account (NUBAN). Its process is usually quite simple and the money is obtained quickly and without the obligation to justify the purpose to which the money is going to be spent. We highlight them better below:
Quick Loan Requirements in Nigeria
- Bank Verification Number (BVN)
- Your Bank Account Number
- A phone number
- A valid means of Identification
- Name in full (it must be the same as the name on your BVN and the account number provided).
- Home address
- State of Residence
Note that the above is mostly filled online without having to visit a physical address or office for documentation. Once you have submitted the required details, if everything is in order and you are considered eligible to get a loan, the money is usually granted in a maximum period of 3 days. Although the most usual is to have your approved loan disbursed within 24 hours.
Main Characteristics of Quick Loans
In the case of banks and financial institutions, quick loans are usually granted to clients whose trajectory and profile are known and, therefore, the entity considers that they maintain sufficient payment guarantees. Another thing is that in order to obtain this credit we resort to a private company either online or by telephone. In these cases, each financier makes its own protocol in this regard and it is convenient to review in detail each clause of the contract because these companies are not under the supervision of the apex bank; the Central Bank of Nigeria.
Below are some highlighted characteristics of quick loans in Nigeria:
- They do not require guarantors
- Loan tenors are usually between 2 weeks to 40 months (maximum)
- Accessing one is super fast and easy
- Loan approval is usually within 24 hours
- Repayment option is flexible
- Protocols and rules vary from borrower to borrower
- Physical offices are not required to access loans
- Quick loans do not require collaterals
Quick loans are usually obtained more easily in Nigeria by any individual with good financial standing, i.e., those who have a good financial history and are not in any way defaulting on a present loan or did not default in the past. All of these information can be tracked, traced and monitored by lenders using any trusted credit information agency or bureau in Nigeria.
Advantages and Disadvantages of Quick Loans
Advantages of Quick Loans
The main benefits of quick loans are the short time they are processed and the money is obtained, therefore they allow to face unexpected payments or pending invoices in a short period of time. In addition, this type of credits tends to be flexible with their terms and installments.
Disadvantages of Quick Loans
With regard to the drawbacks, the main disadvantage of quick loans is the high interest to which they are granted, and in the case of resorting to a financial one, special care must be taken with the fine print because there have been many cases of fraudulent practices and abusive interests. Beyond this, they can be overwhelming, mostly for those without financial discipline. It is easier to access them and borrow while the means to pay back might not necessarily be feasible.
Dangers of Defaulting on Quick Loans in Nigeria
Defaulting on loans are pretty dangerous. Below is a list of dangers associated with defaulting on loans in Nigeria:
Credit Bureau Blacklisting
Unlike with the traditional lending style, it is a bit risky to default on quick loans. An individual risk having their name submitted to the credit bureau who in turn blacklists their names from borrowing in the nearest future.
What is a lien? A lien is a claim or rights that someone has over something you have or possess. A lien or right of retention is the power that is granted by virtue of a contractual bond by which the counterpart is given the power to appropriate the thing owned by the party that has breached since this was previously in its power as a guarantee.
How Liens Work
In a stiuation where you default on a loan payment, your loan provider has the power to hold, withhold, seize monies in your bank account pending when your debt is settled.
Negative Credit Rating
While many don’t see the dangers of defaulting on loans as Nigeria is somewhat poor at keeping financial records and data that could affect one’s social standing, a negative credit rating spells trouble and probably disaster. When an individual is marked negatively, tendencies are that such would never have access to loan facilities again, regardless of whatever setting they are in. There is also the probability that such would have certain rights and privileges within the financial and telecommunication sectors taken or withdrawn. It is surprising to note that these two sectors use and rely on credit bureau information and data from time to time.
Harassment from Loan Provider
One thing everyone hates the most is being harrassed or constantly reminded of a debt. Default on loan is an invitation to harassment from the debt recovery/collection team of your loan provider. Since they are tasked with recovering debts from debtors, they would most likely reach you through every available platform they can. In some cases, you might get e-mail or text messages threats about informing your family members or close associates that you defaulted. Since most of these providers are tech and app-based, your contacts may be reached in order to get to you. This is not only shameful but very embarrassing.
While this post is centred on discussing everything about quick loans in Nigeria, we have detailed all quick loan providers in this post.