How to Access Loans in Nigeria
A few people might frown at the thought of a loan. You constantly hear people say “debt dey fear me! Are loans really that bad? The answer is no. Loans can be a lifesaver when the circumstances are dire and urgent. various loan types serve the purpose of saving one from a bad situation. They include home loans, personal loans, student loans, and loans can be a source of funding for your business idea.
MR. Abel has just been quitted from his home but he is unable to raise money for a new rent that would cover an agent and agreement fee. He resorts to taking a home loan that helps him move into a new home. Similarly, a lot of people have benefited from student loans. Imagine if there were no provisions of a loan for such ones.
Now that we have established the importance of a loan, how do you access loans if you need them? This article explores various means of getting a loan in Nigeria.
Banks
They are the traditional source of funds. Aside from receiving money in the form of deposits, banks give out loans to their customers. They have a variety of loan types to fit individual needs.
If you are a customer, loans are accessible to you. However, the downside of receiving loans from banks include heavy interest rate and heavy bank fees. Banks also sometimes require that you have collateral to get some of these loans.
Credit Unions
These are cooperative institutions controlled by its members of a particular group or organization. For instance, if you worked in a company, you could be in a union made up of staff members of the said company you work with.
You can easily access loans at a more favorable interest rate as long as you are a member. However, loan options might be restricted to a few varieties.
Peer-peer lending
An online platform that links up lenders with borrowers. Borrowers can meet individual investors and get a loan for an agreed interest rate. lending and borrowing occur on a one-on-one basis.
There are no third parties. But this can be risky especially for the lenders. You can also get favourable interest rates. Sometimes you may not get all the amount you requested to get.
This will mean that you may get the other part of your money from a different investor. Consequently, One loan may have multiple sources. It’s important to check for transaction fees that may apply on these platforms if you opt to use their services. Start credit is an example of a peer-peer lending platform in Nigeria
Credit cards
Credit card companies pay the merchants for you. You have the option of paying the card issuer at a later time. Credit cards are primarily used to purchase goods and services.
But to get actual cash, you need to use the cash advance option. If you already have a card, you don’t need an application fee. If the balance is not carried over you incur 0% interest but if it is carried over interest rate is quite high. Credit cards do not offer long-term financing.
Financing companies
These are institutions that specialize in just giving loans. They do not offer any other financial services. They offer competitive rates and short-term loans only. Examples of financing companies include BAOBAB and Lendigo Nigeria
Loan Apps
These are internet-age creations provided by fintech companies. They provide short term loans from as low as 100,000 naira to as high as 50,0000.
SpottR is an example of a fintech company that provides a variety of loan types to its users. From personal loans to business loans and mortgages. You don’t need collateral and with favourable interest rates. To learn more click on the link below.
Government-backed agencies
These are loans provided by public agencies backed by the federal government of Nigeria.
SMEDAN is an example of a government-backed initiative that provides Nigerian small businesses with loans they need.
Conclusion
If you successfully get a loan and payback as when due, you get a good credit rating which makes you qualified for subsequent loans. Always consider interest rates and payback periods before applying for loans. Loans with short-term payback may pressure you into paying back before you are ready to begin payment.
