Are you curious to know what happens if an online loan is not paid in Nigeria? Find out in this guide.
With the dire economic situation in Nigeria, many people have found themselves in some financial difficulties and need a way out by all means.
It’s not common to find an individual who is willing to loan you money in this present economy because of the fear of refusal to pay.
Also, securing a loan from Nigerian banks is often not an easy path to follow due to requests for collateral that the individual may not have to present to the bank and the long processes involved.
This was the case with Mr. Samuel, who had a ₦100,000 hospital bill to offset but couldn’t find a way out until a friend introduced him to a loan app where he borrowed the money without stress.
Now, the question is, will Mr. Samuel be able to meet up with the time requirements of the loan app company? What happens if online loan is not paid in Nigeria?
Are there consequences for not being able to offset a loan at the stipulated time?
Without much ado, let’s find out the loan default consequences in Nigeria.
Loan Default Consequences in Nigeria
Due to Nigerians’ strange attitude towards debt, there are loan default consequences in Nigeria, and we’ll discuss them below:
1. Damage to Credit Score
A loan default can have a substantial adverse effect on a borrower’s credit score, thereby making it difficult for the person to obtain loans in the future.
When this happens, the creditors may see the borrower as a high-risk customer and deny them loans or even charge them a higher interest rate.
2. Legal Action
A creditor can take legal action against a loan defaulter.
When a borrower refuses to pay their debt, the creditor has the right to file a lawsuit against the defaulter, and if the court rules in his favor, the defaulter may be required to pay the loan amount with interest and legal fees.
3. Debt Collection
There are debt collection agencies in Nigeria that specialize in retrieving debt from defaulters.
These agencies may, through text messages, phone calls, and letters, contact the borrower to demand repayment of the loan.
They may even resort to harassment and intimidation to recover the debt.
4. Difficulty in Obtaining Future Loans
A loan default can make it hard for a borrower to get loans in the future.
Financial institutions are reluctant to lend to customers with a loan default history, which can result in difficulty obtaining future business loans.
5. Humiliation and Social Stigma
If the loan default becomes public knowledge, it can result in social stigma and embarrassment for the borrower.
This can ruin the borrower’s reputation and make it difficult for them to obtain a loan in the future.
How to Know if Your BVN is Blacklisted in Nigeria
BVN, which is the short form of a Bank Verification Number, is issued to every account holder in Nigeria.
A BVN is a unique code meant for just you and should be protected.
This also serves as a means of verification and authentication of a person in the banking world.
When an account owner gets involved in any financial crime activities, their BVN can be blacklisted.
Here is how to know if your BVN is blacklisted in Nigeria:
- Dial *565*0# using the phone number connected to your bank account.
- Follow the instructions and enter your BVN as and when directed.
- If your BVN has been blacklisted, you will receive a message stating your BVN has been suspended or blocked.
Moreover, you can also visit the bank to inquire about the status of your BVN.
At the bank, you will be asked to provide your BVN and other necessary information.
The bank will verify and let you know if your BVN has been blacklisted.
Also, If your BVN is blacklisted, it signifies that you no longer have access to your account, and there may be legal implications.
How to Report Online Loan Harassment in Nigeria
If you borrowed money from someone or a loan app and you are being harassed, these are steps to report online loan harassment in Nigeria:
- Ensure that every communication, such as calls, emails, and text messages from the lender, is recorded. This will serve as evidence against the lender during the reporting process.
- Restrict the lender of every access to you. You can do this by blocking the lender’s number from calling, sending emails, and text messages harassing you to prevent additional harassment.
- At this time, it is pertinent to seek legal help concerning the issue. Involve a law practitioner who specializes in consumer protection or debt collection laws.
- Follow all the due processes that the legal practitioner will read to you. It’s also important to contact the lender about harassment and its effect on your mental health.
- If all the above steps don’t work out, report the issue to the police. The lender may be arrested if the harassment is severe and comes with a death threat.
Is it possible to negotiate a payment plan with the online loan app?
You can negotiate a payment plan with the online loan app when borrowing money.
Also, you can contact the lender to discuss the payment option that is convenient for you.
Can the loan company sue me for payment default?
The loan company can sue you for failing to pay the loan you obtained from them.
Your lender may decide to take legal action against you if you spend some of the money and refuse to pay up the balance.
Can the loan app company be able to take money from my account?
A loan app company can only be authorized to take money from your account based on your agreement with them.
The loan terms determine their actions as regards your account.
Read: Best Loan Apps in Nigeria with Low Interest Rate
Lastly, there are consequences for defaulting on your online loan payments, and they include:
- Legal actions.
- Late payment charges.
- Negative credit report.
- Humiliation and social stigma.
- Debt collection company involvement.
- Difficulty in obtaining future loans.
The above mentioned are what happens if online loans are not paid in Nigeria, and to avoid them, ensure to review the loan terms carefully and only collect it if it’s convenient for you.