BY ZAKA KHALIQ, Lagos
As the economic hardship bites harder, more Nigerians are now seeking succour from digital lending platforms which have surfaced on the country’s banking terrain and giving out uncollateralised micro loans to people at alarming interest rates.
LEADERSHIP Sunday can exclusively reveal that though the loans are easier to access, the lenders charged about 30 per cent interest rate per loan request, which is to be paid, in most cases, under one month.
However, some of their poor and unethical practices have left many of their customers biting their fingers after being caught in a debt trap.
Some of the current digital lending banks are Sokoloan, OKash, GetCash, Carbon, Branch, GoCash, QuickCheck, PalmCredit, Get Loans and 9jaCash, among others, with new ones continuing to join the list on a regular basis.
For most of them, the requirements from an interested loan seeker are BVN number, regulated identity card, information on the ATM card, place of work, likely monthly income and date of birth, among others.
The demand for these kinds of private information equally raises questions about the security of those information in a digital world where hacking is now a regular threat.
All these pieces information are to be submitted virtually or digitally as there is no human or physical interaction in the process. Moreover, most of these firms have no physical presence in the country.
The absence of physical presence, it was learnt, poses some problem to the customer. In most circumstances where the customers have had cause to complain, they are only advised to contact certain phone numbers.
When LEADERSHIP Sunday spoke with some users of these digital loan apps, they said customer services had been extremely poor due mainly to their lack of physical presence in the country.
They lamented that if such complaints are addressed to the customer care attendants, they are not responded to.
This obstacle has, however, not deterred hard-pressed Nigerians from seeking financial solace from them.
Reports say these digital lending banks grant several billions of naira on a weekly basis, despite the challenges of high interest rate, poor services, and lack or low regulation of that digital financial space, among others.
Meanwhile, it was learnt the rate of loan default has been on the increase, partly due to the high interest rates which debtors struggle to cope with at the point of settling their debts.
In the end, customers borrow from friends and relatives to settle this debt and request further loans, thereby yoking them to these digital banks.
Gradually, a customer grows from a small loan amount to bigger amount depending on the number of loan requests and previous repayment history, among others.
And similar to loan sharks, these digital banks, LEADERSHIP investigation has revealed, now adopt unscrupulous means to whip debtors into line by sending unsavoury messages about his loan obligations to all his phone contacts, including the person’s spouse, parents or close relatives, hence, causing psychological damage to their debtors, who must still pay back despite this trauma.
Findings revealed that a day after a loan is due, the digital banks have adopted a style whereby two or more people will, on daily basis, call to request the repayment of the loans with threats of prosecution. Messages would be sent to all the customer’s contacts informing them of the loan obligations.
Our investigation revealed that these digital lending firms can access the debtor’s bank accounts and deduct the borrowed money without any prior notice, while in some instances some customers were overcharged or had double deductions on their bank accounts.
It was learnt that each day after the deadline, debtors would pay about 1.5 per cent interest on their loans, until repayment is made.
These digital banks have their respective apps through which a customer interacts with them, and they grant loans of between N2, 000 and N1 million, depending on the package and the app.
To this end, most loan takers now have multiple loan apps and use them to settle one debt with another, just like recycling loans. Moreover, as some of them defaulted and with perhaps a limited number of staff, some loan apps after repeated messages and phone calls to get defaulting customers to pay up, eventually give up but not without informing the country’s credit bureaus as well as informing all the contacts in his phone.
To address this problem, many credible loan apps have become shrewd in terms of risks, focusing more on interests they can derive and less on the number of loans they grant existing and new loan takers.
While some loan takers have good experiences with these digital lending firms, some have nasty experiences in findings carried out by LEADERSHIP Sunday.
According to CashLion customer, Min. Dezaya, “this loan app is very reliable and the speedy disbursement is top notch. However, they need to slash their interest rates; it is too high.
“They should remember that for someone to request a loan, the person needs help. They shouldn’t take advantage of that to collect more than necessary from the person.”
Another CashLion customer, Kyer’an Monday, said: “A good app is an app where one can access loan easily but no matter the number of credit you keep with them, your loan limit is just one week to pay with huge interest. Have they ever thought of where their customers will get such huge interest to pay back in seven days? This is extortion. I collected loans more than four times now, but the duration of the loan still stands at seven days.”
Similarly, customers complained bitterly about the poor customer services of Okash loan app.
An Okash customer, Beverly Onyinye Onuegbu, described its workers are rude, incompetent and poor in record keeping, even as she complained of high interest rate.
“They have rude and incompetent staff, poor record keeping and annoying interest rate. Even after you pay up, they fail to update. I wonder how long it will take them to adequately update a record, yet they keep sending messages and calls to repay,” she stated.
Another Okash user, Florence Olaniran, said: “I don’t understand this app loan at all. The agent will like to disturb you with their calls but if you have issue with them they won’t respond.
“My own experience is that I took a loan facility from them which I paid back with accrued interest, but to my surprise, they deducted another interest from my account on the same day and I sent their agent a message but no response. Later, I contacted customer care but no response. I sent a message to their email and then business number, too; however, up until now, they haven’t returned my money.”
It was the same story with Emmanuel Tosin lamented that repayment has not been confirmed for over five days.
“I’ve sent mails, WhatsApp messages, and calls – no response, and the amount keeps adding up. This needs to be cleared up as soon as possible,” he said.
However, Usman Madugu, a Carbon digital bank customer, applauded the firm’s loan app, stating that it gives loan on time and their customer care agents approach people with courtesy.
Assessing the services of FairMoney loan app, Aghogho Joy said, so far, the experience has been wonderful.
“But just few days back now, I was unable to pay back my loan whose due date was on Monday, April 26, 2021, or rather my repayment fees rose daily. Each time I tried to repay, there is a pop-up message stating that the account details cannot be retrieved. This is poor service delivery and the firm is supposed to have addressed this.”
LEADERSHIP Sunday contacted some of the digital lending firms with complaints of customers and they promised to improve, stating that they are aware of the challenges and would improve going forward.
Reacting to this development in an exclusive interview yesterday, a renowned economist, Mr. Tayo Bello said the digital banks are cashing in on the challenges in the economy and the desperation of Nigerians to just get credit at all cost without minding the interest rate.
He said the 30 per cent interest of these digital loans is alarming and makes repayment difficult in some instances, adding that under no circumstance is it profitable to be living on such loans.
According to him, some of the creditors would be having huge unpaid loans as smart Nigerians might circumvent their system and escape with the loans.
On security of information that customers are divulging on these loan apps, he urged customers to be very careful in a world where hacking is becoming more pronounced.
He said vital information such as BVN, ATM card details, date of birth, lace of work and so on are private and should not be a public document.
He warned the patrons to be extra careful and not to have their fingers burnt in the process, adding that these digital banks are just using the uncollateralised loans as the bait to lure customers.
“In a country ravaged by poverty, unemployment and non or low disposable income, people can go to any length to get money. It’s surprising how people can survive on such lending with outrageous interest rate, which is to be paid under one month,” he said.