Complete Guide on Applying For Personal loans in Nigeria
Personal loans could be referred to as loans offered to an individual for personal use and this is contrary to business or commercial loans that are given only for business expansion and such other needs. There are various reasons for personal loans depending on the person that wants to obtain the loan. Such needs could be paying house rent, hospital bills, buying a new car or television set, buying a computer, school fees, meeting some emergency needs, and several other miscellaneous expenses. Usually, this personal loan is obtained to meet the personal needs of the beneficiary and could also be regarded as a private loan. This piece explains various platforms people can obtain personal loans across Nigeria.
Importance of Personal Loan
Some periods are inevitable in life and these periods are times one cannot afford the basic necessities of life. These periods could occur as a result of the slow movement of business, high rate of customers debt, irregular salary, and many other reasons. In times like this, people may run out of rent, and the feeling of indebtedness could be eradicated by obtaining this personal loan.
Personal loans could be obtained to meet the need for a new car, to rent a new apartment, pay children’s school fees, pay hospital bills, emergency funds and such other circumstances of similar nature.
Also Read- TOP HOUSING LOANS PROVIDERS IN NIGERIA
Summarily, personal loans are important because they aid us in periods when we are in a fix!
Requirement for getting personal loans in Nigeria
Getting personal loans in Nigeria has different requirements which vary from one lender to another. Different lenders (banks, micro-finance, cooperative societies, etc) have various requirements but below are some common requirements for obtaining a personal loan in Nigeria:
- Personal bank account details including Bank Verification Number (BVN)
- Valid means of Identification such as International passport, Driving license, National ID or Voter’s card
- Details of Address using Utility bills which includes NEPA bill, Water bill, waste bill, tenancy agreement or any proof of address.
- Recent passport photograph.
- Statement of account or salary payslip.
- The person must be a Nigerian citizen or have a permit to stay in Nigeria
- Employment (Employed or self-employed)
Those are the common basic requirements to get a personal loan in Nigeria. It is important to note that some financial platforms will only make loans accessible to those who maintain an active account with them.
Collateral requirement for personal loans in Nigeria
Collateral requirement for getting personal loans in Nigeria varies according to lenders, as some lenders do not require any collateral at all to give out personal loans to people, while some do require collateral. The lenders that do not require collateral in obtaining loan substitute it for the beneficiary’s salary account details and some other guarantees.
The average collateral requirements vary from landed properties to any asset of 150% value of the amount of loan that a person is getting. Car Loans Explained – How to get a Car Loan in Nigeria
Interest rate of personal loans in Nigeria
The following are the factors influencing personal loans in Nigeria:
- The first factor is the lender. The lender determines how much interest they want to charge for the money they are lending out to people.
- Another factor that influences interest rate is the payment terms. Payment within a short period attracts little interest, while repayment over a long period of time attracts a larger interest rate. Therefore, the duration of the repayment determines the rate of interest to be charged.
- The market also determines the interest rate.
Generally, interest rates will vary from 8% to 30% on average using a combination of the listed factors.
Repayment of personal loans in Nigeria
Repayment of personal loans in Nigeria is usually a fixed amount of installments spread over a period of time, and this repayment depends on the client’s capacity to pay back the loan and the terms offered by the lender. A client can decide to pay back the loan in one installment or may spread it over several installments. Repayment periods range from a month to thirty-six months (1 – 36) depending on the lender.
Places you can get personal loans in Nigeria
The following are the available places personal loans can be obtained:
- Commercial Banks
All commercial banks in Nigeria provide personal loans to individuals, but most of them require such individuals to maintain an account with them.
These steps could be helpful in obtaining a personal loan from a bank:
- Walk into any of the banks
- Locate the customer service desk
- Inform them of your intention get a personal loan
- Appropriate information and process to follow will be made available for you.
- Make your decision afterwards based on the information provided, and ask for clarity on ambiguous terms.
- Communicate with your account officer for a better decision making
- Micro-Finance Banks
Microfinance banks also provide personal loans to interested people. The person is advised to walk into any micro-finance bank close to him/her location and make his intentions known to them, after which he will be given the required details.
Once the requirements have been stated, the person can then decide to obtain the loan if the terms are favorable, or decline if otherwise.
- Online Platforms for loans
You can get personal loans online. All you need is your phone or computer with a connection to the internet, and most of these online lenders offer collateral-free loans which makes it easier to obtain loans. Any interested individual can search online to get the details of the available platforms.
- Cooperative Society
A cooperative society is an association of people who willingly come together for economic, cultural and diverse purposes. Co-operative societies are a major part of the economy of Nigeria as the majority of them are registered with the Corporate Affairs Commission (CAC) and operate with well defined rules and regulations.
Cooperative societies provide personal loans only to its members. Any interested person just has to locate the one with which he/she matches the requirements and join the group. Only then can the person access the loan.
- Family and friends
This is usually the first resort of anyone looking for personal loans. One can approach any of the relatives that are wealthy to obtain a loan but there might not be an assurance of granting it due to the fear of repayment. But once there’s a guarantee that includes signing of agreement by both parties, it could help reduce the fear.