Getting financing for either personal or business purposes is not an easy task in Nigeria. The traditional banks have very cumbersome processes with unending demands for paperwork and approvals. Nigerian banks also have an unsavory reputation for making demands that could potentially bankrupt debtors.
Online lending services are proliferating right now in the Nigerian lending space. Are they any better than traditional banks in their dealings with customers. Here are a few pointers to note in dealing with online lenders in Nigeria:
- Online lenders might emphasize their speed of transactions but be very careful before committing on their loans. Their interest rates and loan tenors are usually very stringent. Most of them only do short term loans of 2 – 4 weeks with outrageous interest rates of between 15 – 25%. Such lenders claim the higher interest rate is to compensate for the higher risks faced in lending to people with little or no credit history
- The loans offered by online lenders are usually not large enough to use in any long term funding of businesses. The loan amounts are designed to be used on immediate needs
- Online lenders go as far as calling contacts on your phone book and customers to embarrass debtors into paying up loans. The legality of this practice is very debatable
- On a positive note, small loans can be accessed in minutes via an online lender. This fast response time has enabled them to gain a growing percentage share of the lending market in Nigeria. Most of their loans can be processed via mobile devices. This speed of lending can really be helpful in emergency situations
- Traditional banks are beginning to fight back with competing products enabled by technology. Guaranty Trust Bank (GTB) has launched QuickCredit, a completely online lending service for customers of the bank. There are some minimum conditions to be fulfilled to qualify for this service. The interest rate is an incomparable 1.33% per month with loan tenors between 6-12 months. The loan amounts are much higher than those offered by online lenders. This is a very credible alternative.
Potential customers need to be aware of the most efficient and affordable lending alternatives in the market. We at 2dotsmarket.com will always strive to make this and similar information available via our blog @: blog.2dotsmarket.com