Access to finance has been a major problem in Nigeria for the common man. Before now, it was near impossible to get easy access to loans and this made life difficult who those who wanted to kick-start a business or have other pressing financial needs to settle.

It all changed with the introduction of loan apps around 2016. With these mobile applications, one could get a loan in minutes, and the good part is it requires no form of collateral whatsoever. Due to this fascinating development, many jumped on the train and these apps from various service providers have become household names today.

In life, whatever has a good side tends to have a bad side and these loan apps are not left out. It has become headlines of late as these apps have been accused of cruelty in how they treat customers who default in payment, going about calling various people in the defaulter’s phone contact and also going as far as using the defaulter’s picture to post obituaries online or a label of being a wanted criminal.

Privacy advocacy groups have decried this method employed by the loan apps and have called on the government and other regulatory bodies to put a stop on the inhumane practice. It is outright wrong no doubt, but can the loan apps be really blamed for doing such?

The number one and only reason customers of these loan apps have to go through such horror is because they defaulted in payment and the truth is it cannot be treated with kid gloves.

Traditionally, when a loan is given out, there is collateral for backup in case the person defaults on payment. That way the financial institution does not need to chase the defaulter. In this case, loan apps do not request collateral, meaning they have nothing to fall on if a defaulter does not pay. They therefore have to resort to some cruel kind of method that puts pressure on the defaulter to pay, otherwise, the loan app providers will run out of business at a quick rate.

Indeed, they will run out of business because Nigeria is not one of the most trustworthy places in the world when it comes to dealing with money. Many take these loans thinking it’s free money and can escape not paying back. Why then wouldn’t the loan app come and hunt such people?

There are some who for genuine reason that is not of their own fault default in payment but these loan apps won’t hear word and will still go ahead to harass them. It has to be noted that this service is designed for payment to be made back on or before the due date. It is not their problem one is going through a challenge. It will only complicate matters for a system that is structured for prompt payment, anything other than that is trouble looming. It is no surprise loans are targeted towards those who have a guaranteed and stable flow of income that reflects in their bank accounts, rather than someone on the opposite.

So long one desires to take a loan from these easily-accessible apps, they must never default in payment. Before taking a loan, they have to structure how they intend to pay back and where the funding will come from. This has to be critically considered otherwise the ugly will come visiting. If they know they cannot meet up with payment, they should refrain from taking the loan no matter the temptation. Yes, temptation, as more loan apps are springing up at a fast rate.

That is a good development since more finance is made available but bad in itself because of what happens at the other end. If one desires not to experience such traumatic disaster, the job is simple and left in the hands of whoever is taking the loan.

Originally written in Pulse Nigeria on February 12, 2022, titled ‘1 Big mistake to never make when using loan apps’.