The Guardian learned on Monday that the default rate was growing at the same breakneck speed the sector’s lending had witnessed in recent years, compelling companies to reconsider their business models.
For many operators, the conditions and processes of loan applications are as flexible as picking an item off a supermarket shelf. Most applicants go through the process in the comfort of their homes and offices and only visit the lenders’ offices to file a few documents such as passports, utility bills, account statements, and identity cards. The majority of the lenders access applicants’ account standards via apps, though with the customers’ authorisation.
BUT what Nigerians, who patronise smart lenders, gain in terms of convenience and speed, they lose in cutthroat interest rates as high as 70 percent in some cases. For instance, a pioneer operator started readjusting pre-COVID payment terms signed with customers a few months ago. Some of the emails sent during the Coronavirus lockdown informed customers that their payment dates were rescheduled, with some of them asked to repay 10 days earlier than the agreed monthly due dates.
Top-up allows a borrower who has not defaulted in their obligation for a reasonable period to renew a running facility by taking an additional loan. Top-up applications are not supported with proof of employment and utility bills. A customer simply accepts an offer to take more loans or signifies an interest, fills the loan form and his/her bank account is credited.