How to Identify and Avoid Loan Sharks in Nigeria (2022)

Have you tried getting a loan in Nigeria and you fall into the trap of unprofessional lenders? This means that you have fallen victim to loan sharks in Nigeria. Today, in Nigeria, loan sharks are everywhere both online and offline. 

The online lenders – loan apps are the easiest to fall prey to because you often come across their ads promising to give huge loans but high interest to pay. However, after promising you these loans they use illegal means and sometimes unprofessional ways to get you to pay back. 

There are many reasons why Nigerians fall prey for these loans. The first reason is the economic situation in Nigeria. The prices of goods and services have increased continuously over the years and there has not been a corresponding increase in salaries and wages.

This has reduced the purchasing power of low-income earners and middle-income earners in the country today. Another reason why many fall for loan sharks in Nigeria is the need to use money to pay emergency bills. 

Although expenses like house-rent and school fees can be saved ahead. Many Nigerians still find it difficult to pay and due to this they have to get loans despite the high interest it demands.

So if you have not fallen for loan sharks in Nigeria especially the online loan app you need to consider yourself lucky. This article will guide you in how to identify and avoid loan sharks in Nigeria.

Read also: 10 Quick Ways to Save Money in Nigeria

Table of Contents

What is a Loan Shark?

A loan shark is a money lender (a person or company) who offers loans at extremely high interest and has strict terms of collection upon failure of customers when they are unable to pay up. Loan sharks generally operate outside the law. They will often bend the law at all cost to get their money back.

There are loan sharks in Nigeria. However, many Nigerians do not know this. Many of these loan sharks are on the internet. In fact, they parade themselves as legit online loan applications or websites. Just in case you do not know these loan sharks, here are some popular loan sharks in Nigeria.

1. GoCash

2. Kashkash

3. Ease Cash

4. 9Credit

5. LCredit

6. iCredit

7. NCash

8. EasyCredit

9. OKash

10. Sokoloan

Read also: How to Save Money to Buy a Car in Nigeria

How to Identify and Avoid Loan Sharks in Nigeria

Here are successful steps to take to identify and avoid loan sharks in Nigeria.

1. Lack of Communication

This is one of the best ways you can recognize loan sharks in Nigeria. They do not communicate well in the sense that they do not tell you their line of action if you do not pay up on time. 

They will not tell you before getting the loan and they will not tell you after getting the loan. All they do is to scare you about the consequences if you do not pay up your loan on time. 

The reason why loan sharks communicate badly with their customers is because they have poor organizational structure and guidelines on how to collect back their money.

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2. Unauthorized Access

This is another way you can identify loan sharks in Nigeria. Many of the loan sharks in Nigeria will demand that you download their apps before you can get a loan from them. When you download these apps there are many terms and conditions they force you to agree on before going ahead to give you a loan.

The worst part about this is that many do not read these terms and conditions; they just click ‘I agree’ to go to the next page. By agreeing to these terms and conditions you have given the loan sharks permission to access every information on your phone. They will access your contacts to call your family and friends if you do not pay up on time.

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3. High Interest Rates

This is the most popular way you can recognize loan sharks in Nigeria. Commercial banks in Nigeria charge 9% – 11.13% per annum but loan apps charge 20% – 30% per annum. This could even be weekly or monthly.

Loan sharks issue high interest on the loans they offer to you with minimal time to pay back. Some of them even remove their interest from the loan before giving it to you.

You can easily identify online loan apps that are loan sharks by checking the review of their apps on the Google play store or iOS store. If these loan apps are bad you will notice this from the comments and reviews. So if you have no valid reason this is a valid reason to avoid loan sharks in Nigeria.

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4. BVN Exposure

The main reason why you should avoid loan sharks in Nigeria is for this reason. All loan sharks in Nigeria always demand for your bank details especially your BVN in the name of giving you a collateral-free loan. 

Although this sounds like a good offer they use this against you when you do not pay up on time to blacklist you from getting loans from other credit bureaus. And when they do not do this they sell your BVN and other bank details to scammers to make money.

5. Absurd Repayment Plan

You should avoid loan sharks in Nigeria because of their absurd repayment plan. Many of them do not explain your repayment plan and those that do give you insane plans that do not meet up with your expectations.

Most times when many cannot meet up with paying back the loans they have to borrow from other loan apps to pay back and this makes many lenders to be trapped and on the long run they get addicted to borrowing loans. 

Read also: How to Shop Online Safely in Nigeria

Conclusion

There are many obvious reasons as to why many Nigerians get loans from loan sharks. However, desperation has been proven to be the main reason. It is important to make sure you verify the loan apps you want to borrow money from – making sure they are legitimate – licensed by the government and Central Bank of Nigeria (CBN) before you go ahead.

That’s all in this article. As usual, let me know if I missed any part of this article. Also, let me know if there are topics you want me to write about on the blog or talk about on our YouTube Channel or maybe our podcast.

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About theinfoworth

Ralph Bamigboye is the brain behind TheInfoWorth.com blog and Finance Naija YouTube Channel. He has helped many individuals to start their businesses and make money online.
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