…as Credit Bureau fails to stem the tide

By ADEBAYO OBAJEMU

The advent of online lending platforms, which became a feature of our financial life in recent time seem to be facing a major challenge that has made banking a hazardous venture with mounting nonperforming loans. High default rate that is also common in the traditional banks and led to the establishment of AMCON with over N7.5 trillion toxic loans in 2012 has again reared its ugly head with the online lenders.

Such credit platforms like Kwik Cash appear to have hobbled the mainstream banks’ lending platforms that require long and convoluted application process. These online financial technology companies are disrupting the lending industry and some of them offer quick, easy and cheap loans with no collateral.

Unlike the traditional banks that offer loans with high interest rates, tortuous paperwork or requirements as well as provision of guarantors among others, these fintech companies, otherwise known as lending platforms provide loans in simple and effective ways. Although the interest rates are also high, some upto30 percent, their liberal and simple application process make them highly attractive to the people.

The most prominent is Kwik Cash that offers loan on USSD platform in partnership with banks, technology companies. Kwik Cash has one of the most effective and convenient ways of getting quick and instant loans in Nigeria. Others also offer instant loan via mobile apps and websites.

Business Hallmark’s finding reveals a shocking cesspool of defaulters who have benefited from the loan facilities of these online lending platforms but refused to pay back. More shocking is the fact that some of these defaulters managed to escape scrutiny and still secured loans from other online platforms.

Paylater is a quick online lending platform that offers short term loan without collateral for urgent needs and expenses. Through Paylater one can get a loan from N50,000 to N1 million at different interest rates between 5 to 12.6%. The loan is determined by the risk involved and cash activities via your BVN.

When BusinessHallmark checked out Paylater app, this reporter applied for a loan of N70,000, the system automatically generated N68,500 (meaning some charges of about N2,000 have been incurred). The system also pegged interest rate at 12% monthly for a four-month repayment plan at N25,345 per month.

This simply means this reporter will return N10,380 to Paylater in April 2019 for a loan of N70,000 in January 2019. Not too bad to those with desperate needs such rent and school fees…

Abimbola, a fashion designer who just started out applied for N5000 from Branch, an online lending platform. She was instantly credited with same and she was able to pay back in a weekly installment. Then a week after paying back fully, she applied for N10,000 and was given, at the end she was able to build confidence to the extent that she was in August offered a loan of N50,000.

Then her fledging business experienced hiccups that made it difficult to pay the last weekly installment of N5000. Then she shifted to Kwik Cash and Aella Credit for a loan of N5000 each and was given, in spite of the fact that she had defaulted in loan repayment to Branch.

Eunice, a petty trader told this newspaper that she was embarrassed by Kwik Cash when she defaulted on loan repayment of N5000 she was offered in February as a month after default, they started sending text messages to her contacts informing them of the default, and threatening to report her to Credit Bureau. In April, she was able to secure N5000 loan from Zedvance, another online loan facility to repay Kwik Cash.

Jolayemi’s experience was similar to Eunice’s. A private school teacher, he secured loan of N5000 from Kwik Cash, defaulted on payment when the money he was expecting from his brother failed to materialise. He did everything he could to get money to repay the loan to no avail, then one of his friends asked him to try his luck at Paylater, and he was instantly credited with N5000.

By that time, Kwik Cash had been calling him as well as sending threatening text messages to him and his contacts that he would be reported to Credit Bureau.

Mr. Ambrose Omordion, a financial expert, and chief research officer at Investa informed this newspaper that though “Credit Bureau is making efforts to punish defaulters, it can only work on cases reported to them; I can tell you that most of these online lending platforms rely on persuasion to get defaulters to pay. They rarely apply the Credit Bureau option. It is only when that fails that they inform the Bureau.”

Continuing, Omordion said, “I knew of few cases where defaulters were actually reported to the Credit Bureau.”

He mentioned the case of a friend whose relative defaulted in paying back loan offered to him by Kwik Cash, and when he wanted to take loan from Quick Credit, another online lending platform, the later refused him, citing his indebtedness to Kwik Cash.

“I advised them to find a means of paying back the loan, and they did,” Omordion said.

When BusinessHallmark visited the Opebi office of RenMoney, the hall was full of applicants who did not have the patience of applying online. One of them, Adeniyi Samuel, a furniture maker told this newspaper that he came to submit his bank detail for the last six months. As he was chatting with this reporter, his account was credited. He had applied for N500,000 loan a day earlier.

At RenMoney, this newspaper learnt that it is impossible to default because the facility is watertight. They will only give loans to salary earners or people who have their own businesses with three guarantors. Renmoney customers can get loans up to N4,000,000 that can be repaid within a period of nine months without tendering collateral or a guarantor.

To apply for a loan from Renmoney, you’ll have to meet certain conditions. Applicants are expected to be between the age of 22-59; have a steady source of income with a functional current or savings bank account and a valid means of identification.

Upon request, the applicant is expected to provide verification of their monthly income and a report of their previous loans from a credit bureau. All these are to be submitted to any Renmoney office for confirmation.

For Renmoney quick loan request, a N70,000 loan would worth N83, 690 in four months repayment plan. This implies an average percentage between 4% and 4.5% per month.

When this reporter visited Fair money office at Victoria Island, the experience and requirements are the same as RenMoney’s. Here, the reporter was informed that Credit Bureau is alive to its responsibility. When told of some people who were able to secure loans from other online lending platforms in spite of being indebted to other lenders, a staff of Fair Money, who craved anonymity, said those people in question were not reported to Credit Bureau.

“These online lenders may have threatened to report them, but they did not. They may have given them a long time and latitude to pay. Once reported, they cannot access any loan facility again”, he said.

Efforts to get reaction from Credit Bureau failed as call to its official line was not picked and text messages were not replied.

Despite the motive of providing quick, easy access, cheap interest rates and collateral free loans, most of the lending platforms still offer high interest rates compared to commercial banks.

Paylater and Kwik Cash are the easiest to use in terms of documentation and offer fast access to credit. Kwik Cash is the most innovative with its USSD option. Kwik Cash has the highest interest rate at about 15% for half a month.

Zedvance offers a more competitive interest rate pegged at 4% to 4.5% compared to other lending platforms. The interest rates for most of the platforms are not fixed based on factors such as risk level of a borrower, salary range, house rent and others. On the whole, there are more than twenty online lending platforms.

Business Hallmark’s findings on some of the popular online lending platforms

Renmoney

Renmoney customers can get loans up to N4,000,000 that can be repaid within a period of nine months without tendering collateral or a guarantor.

To apply for a loan for Renmoney loan, one will have to meet certain conditions. Applicants are expected to be between the age of 22-59; have a steady source of income with a functional current or savings bank account and a valid means of identification.

Upon request, the applicant is expected to provide verification of their monthly income and a report of their previous loans from a credit bureau. All these are to be submitted to any Renmoney office for confirmation.

For Renmoney quick loan request, a N70,000 loan would worth N83, 690 in four months repayment plan.

This implies a percentage between 4% and 4.5% per month.

Renmoney lending app

Requirements:

BVN, Bank statement,

Valid ID card,

Employment letter

Platform: Internet

Interest rate: 4 – 5%

Loan tenure: 3 to 12 months

Top up: No

Repayment channels: Quickteller, cheque, POS, cash and Online transfers.

Aella Credit

Aella credit is an app-only easy and quick loan platform. It is designed to help employees access more funds between N1,500 and N700,000 and an interest rate between 4% – 29% monthly.

Aella credit is available in Ghana, Nigeria and the Philippines.

  1. Aella lending platform
  2. Requirements: BVN
  3. Platform: Mobile App
  4. Interest rate: 4 – 29%
  5. Loan tenure: 1 to 2 months

Top up: No

Repayment channels: Direct debit

Kwik Cash

Kwik Cash offers both internet-based, app and USSD loan options. It partners with banks, mobile network operators, and technology companies on a mission to make personal banking services convenient and accessible to all Nigerians.

On Kwik Cash, one   can get a loan as high as N15,000 at 15% interest rate for 15 days (half a month)

Kwik Cash lending platform

1.Requirements: BVN

  1. Platform: USSD, Mobile App
  2. Interest rate: 15%
  3. Loan tenure: 1 month

Top up: No

Repayment channels: Direct debit

Rosabon Finance Quick Loan

Rosabon finance is one of the fastest and easiest ways to access a personal loan in Nigeria without collateral. On Rosabon platform, a loan of N70,000 attracts a 4-month repayment of N82,915. The interest is about between 4 and 6% per month.

Some of the requirements for getting a quick cash loan from Rosabon finance include being in a paid employment, between 21 and 58 years of age, have a salary account, have a pension account or tax ID, have a valid Proof of Identification and a recent utility bill.

Rosabon lending platform

Requirements: Employment letter, salary account, pension account or tax ID, Valid ID, Utility bill.

Platform: Internet

Interest rate: 4 – 6%

Loan tenure: 3 to 12 months

Top up: No

Repayment channels: Cheque, Direct debit

Zedvance

Zedvance Limited is a consumer finance company providing a quick and fast loan at a highly competitive rate. For Zedvance, the interest rate depends largely on how well you can bargain and the level of risk involved in your loan. It is for salary earners in the country.

For Zedvance’s quick cash loan, interest stands between 4.0% and 4.5% and loan amount largely depends on your net pay. Using its loan calculator, a loan worth N70,000 for 4 months will attract N82,456 in total repayment.

Zedvance lending platform

Requirements:

Employment letter,

Salary account,

Official email address,

Valid ID,

Utility bill

Platform: Internet

Interest rate: 4 – 4.5%

Loan tenure: 3 to 12 months

Top up: Yes

Repayment channels: Cheque, Direct debit

Page Financials

Page Financials is an innovative retail financial institution offering various quick personal and salary advance loan to meet the financial request of customers. On Page Financial, it takes six steps to request for a loan and the first one is inputting your BVN details.

For its loan, Page Financials offers a daily rate of 0.5% which accrues on its Debit card issuance also known as Pledge Finance. Pledge Finance debit card is a preloaded with up to N500,000 depending on your net monthly income. The company also charge a one-off fee of N1,500 for the card valid for a period of 3 years.

The interest rate is accrue daily at 0.5% which is about 15% monthly on the loan card.

Pledge

Pledge lending platform

Page Financials

Page Financials lending platform

Requirements: Employment letter,

Salary account,

Valid ID,

Utility bill.

Platform: Internet

Interest rate: 15%

Loan tenure: 3 to 12 months

Top up: Yes

Repayment channels: Cheque, Direct debit

FINT Loan

FINT helps match lenders (individuals looking to lend) with creditworthy borrowers for a competitive return and at an attractive interest rate. The quick loan platform offers interest rate based on risk score – using a numerical expression based on a level analysis of a person’s information.

Apart from this, like other lending platforms in Nigeria, FINT charges the borrower two fees that are both one-time payments. The first is a verification fee (NGN 3000) and the second is a closing fee (8%). The closing fee is to be paid before disbursement of the fully-funded loan. In addition, a transfer fee (1.8% + NGN100) is passed on to the borrower.

FINT interest rates range from 3% to 5% per month depending on borrower’s risk score.

Fint lending platform

Requirements: Employment letter, Salary account, Valid ID.

Platform: Internet

Interest rate: 3 – 5%

Loan tenure: 3 to 12 months

Top up: Yes

Repayment channels: Cheque, Direct debit