Loan apps are becoming increasingly popular in Nigeria, as they offer a fast and convenient way to get money without having to go through a traditional bank.
Loan apps in Nigeria are mobile apps that allow users to borrow money quickly and easily. While a few offer business and SME loans, most loan apps in Nigeria provide quick loans, which are a form of unsecured loans, meaning that they do not require collateral.
To apply for a loan from a loan app, you will typically need to provide the following information:
- Name and contact information.
- Your bank account information.
- Employment status and income.
- Your credit history.
- A government-issued means of identification.
- Address verification and more.
Loan apps in Nigeria offer a convenient way to access funds quickly, especially for individuals with limited access to traditional banking.
In this article, we take a look at some of the best-performing loan apps in 2023.
Best Loan Apps in Nigeria
Earlier in the year, the Central Bank of Nigeria revoked the licences of some Microfinance Banks and loan apps in Nigeria. The affected loan apps were charged with operating outside the laid down rules of the governing bank.
To ensure safe borrowing, nairaCompare has curated a list of the 10 best loan apps in 2023 that have been approved by the central bank.
Renmoney is a financial institution that provides microfinance services such as loans, savings and deposit funds.
Through its app, borrowers can apply for a convenient loan to meet needs like paying rent, school fees, buying a new car, medical bills and more.
The Lendigo app, a product of Lendigo is a financial technology firm with a vision to become Nigeria’s leading financial institution dedicated to SMEs through technology and innovative practices.
Lendigo provides easy and fast access to working capital to Nigerian SMEs according to their individual requirements and suited to their business and finance needs.
Through the Lendigo app, business owners can apply for short-term loans.
3. Money In Minutes
Like Renmoney, Money In Minutes believes in making access to finance easy, affordable, and quick. A UK-originated finance company with a presence across three continents, Money in Minutes provides personal and business loans to intending borrowers.
4. Alat by Wema Bank
Rated as Africa’s first fully digital bank, Alat, a product of Wema Bank, is constantly introducing products and services tailored to the needs of its customers at every stage of their lives.
So far, it has provided loans to more than one million individuals, families and businesses across Nigeria, helping them achieve their personal and financial goals.
CredPal is an online platform that provides loans to individuals.
The platform’s Credit Builder is a tool to help customers with a poor credit history improve their credit score by offering them access to credit through investments.
By making investments and timely repayments, they can rebuild their credit history.
Fint is a financial technology company with a mission to power access to affordable credit and attractive investments for individuals and small businesses in emerging markets.
Through its mobile app, Fint assists existing businesses to provide access to loans and investment opportunities for their clients.
Another prominent loan app in Nigeria, Pennylender is passionate about financial inclusion. The platform provides loans to individuals, employees and business owners, whether you are in the formal or informal sector.
8. Fast Credit Limited
Fast Credit Limited, FCL, is in the micro-lending market by providing value-based lending to the bottom of the pyramid that may not have access to credit from the traditional banking system in line with the financial inclusion policy of the Central Bank of Nigeria.
Its Private Sector Loan is a personal loan that provides simple and fast ‘all-purpose’ cash loans to employees of corporates such as Banks, TELCOs, Insurance/other financial institutions, FMCGs, Pharmaceuticals, Aviation, Oil and Gas employees.
9. C24 Capital
C24 Capital is a financial institution which provides retail loans for consumers in need of quick financial solutions. Through its app, the platform provides SME Business Loans designed to assist clients with business emergencies.
The loan enables business owners withdraw from their account beyond their actual balance and with an agreed repayment plan. It also offers personal loans, lease financing as well as LPO financing.
With the Carbon Loan App, borrowers can get instant loans without collateral, guarantors, and within minutes. The platform empowers individuals with access to credit, simple payment solutions, and easy-to-use tools for personal financial management.
Before you select which loan app to apply to, make sure you visit nairaCompare to compare interest rates, fees and other benefits to ensure that you choose a loan that is best suited to your needs.
Pros and Cons of Using Loan Apps in Nigeria
Using loan apps in Nigeria, like in many other countries, can have both advantages and disadvantages.
It's essential to consider these factors carefully before deciding to use such apps.
Here are some of the pros and cons of using loan apps in Nigeria:
Loan apps provide a quick and convenient way to access funds. The application process is typically straightforward, and approvals can be quick.
Many loan apps are accessible to a wide range of individuals, including those without a traditional banking history or credit score.
Loan apps in Nigeria often offer rapid approval and disbursement of funds, which can be crucial in emergencies or for urgent financial needs.
● Flexible loan amounts
You can typically borrow small to moderate amounts of money, depending on the app and your creditworthiness.
● No collateral required
Typically, most loan apps in Nigeria do not require collateral, making them more accessible to borrowers who don't have valuable assets to pledge.
● Variety of loan types
There are various loan apps catering to different needs, such as payday loans, personal loans, business loans, and more.
● High interest rates
Many loan apps charge high interest rates and fees, which can make the cost of borrowing expensive. It's crucial to carefully review the terms before borrowing.
● Short repayment periods
Some loan apps require repayment within a short period, often a few weeks. This can lead to financial stress if you're unable to repay on time.
● Debt cycle risk
Frequent borrowing from loan apps can trap borrowers in a cycle of debt, as they may need to take out new loans to repay existing ones.
● Privacy and data security concerns
Loan apps often require access to personal and financial data, raising privacy and security concerns. Ensure you choose reputable apps with strong security measures.
● Impact on credit score
Defaulting on loans from loan apps can negatively impact your credit score, potentially limiting your access to traditional credit in the future.
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Tips for using loan apps in Nigeria safely.
- Only borrow money from reputable loan apps.
- Make sure you understand the terms and conditions of the loan before you apply.
- Borrow only what you need and can afford to repay.
- Make sure you have a plan for how you will repay the loan.
- Be careful of loan apps that require you to provide sensitive personal information, such as your bank account password.
Remember to always visit nairaCompare to know more about loan apps in Nigeria, interest rates and other available options.
How to Build and Maintain a Good Credit Score
Before taking a loan from an online lender, you have good credit. Not only does this improve your loan offer, it also puts you in good standing with the lender.
Building and maintaining a good credit score in Nigeria is essential for securing favourable loan terms and improving your financial standing.
Here are steps to help you achieve and maintain a good credit score:
● Understand Your Credit Score
Familiarise yourself with how credit scoring works in Nigeria. The credit scoring system may differ from other countries.
● Check Your Credit Report
Obtain your credit report from credit bureaus like Credit Bureau Association of Nigeria (CBAN) or CreditRegistry. Review it for errors or inaccuracies and dispute any discrepancies.
● Pay Bills on Time
Timely payment of bills, including utility bills, credit card bills, and loan repayments, is crucial for maintaining a good credit score.
Late payments can negatively impact your score.
● Use Loan Apps Responsibly:
If you use loan apps, borrow only what you need and can comfortably repay. Avoid frequent borrowing or rolling over loans, as this can lead to a debt cycle.
● Keep Credit Utilisation Low
Try to keep your credit utilisation ratio (the amount you owe compared to your credit limit) below 30%. High utilization can negatively impact your score.
● Maintain a Stable Employment History
Lenders often consider your employment history when assessing your creditworthiness. A stable job history can be viewed favourably.
● Build a Positive Payment History
Consistently making on-time payments over an extended period demonstrates your creditworthiness.
● Set Up Payment Reminders
Consider using payment reminders or auto-debits to ensure you never miss a payment deadline.
Remember that maintaining a good credit score requires consistent effort and financial responsibility.