Hello fellow Brooklynites, 👀
And if you’re not from Brooklyn, you’re also welcome
You’re Nigerian? Yh even better
As a Nigerian, managing personal finances can often feel like navigating a maze of expenses, responsibilities, and unexpected costs.
School fees, starting a business, house rent, medical emergencies, black tax or even Grandma swallowing cutlass, the need for additional funds can arise at any moment.
In such instances, instead of asking “abi kin salo ni” the question to ask is
“Can I get a loan for this”?
With the increasing costs of living and the need for financial growth, many people are turning to loans as a means to achieve their financial goals.
Why don’t you join the moving train?
A loan is a financial arrangement in which a lender provides funds to a borrower, who agrees to repay the borrowed amount over time, usually with interest. Loans are commonly used by individuals, businesses, and governments to finance various expenses, investments, or projects when they do not have immediate access to sufficient funds.
Forms of Loans available for you
Secured Loans: The Borrowers’ Best Friend
Imagine you’re at a Nigerian bukka and your ATM card decides to fail you,
You’re so hungry and you want to eat first, the lady at the cashier will ask you to drop your phone before swallowing the first morsel,
This is essentially what a secured loan is like, but instead of food, you’re getting money, and instead of a bukka, you’re dealing with a bank. The phone (or any other asset) acts as your “collateral,” ensuring that if you don’t return the loan, the bank can take it back. It’s like having a get-out-of-jail-free card, but for your financial woes
Unsecured Loans: The Wild West of Finance
Unsecured loans are like the Danfo drivers without ignition keys.
You know those guys? They trust the wires so much and know that when they join them together, the car will start.
These types of loans don’t require any collateral, making them the perfect choice for those who prefer to rely on wires than keys.
The catch? The interest rates are usually higher than those for secured loans, as the lender takes on more risk. It’s like taking a trip to the bank without a map, but with a promise to pay back, you might just find your way out of the financial wilderness.
A promise is a debt innit?
These loans can be used for a variety of purposes,
Personal loans: Urgent2k to sort one or two, mostly unsecured.
Business Loans: Designed to provide funding for businesses to start or expand operations, purchase equipment, or manage cash flow. They may be secured by business assets or unsecured, depending on the lender and the borrower’s creditworthiness.
Education: Student loans are used to finance higher education expenses, including tuition, books, and living expenses.
Mortgage: A mortgage is a loan used to finance real estate, usually a house or landed property. The property serves as collateral for the loan, and the borrower makes regular payments, including both principal and interest, over a specified period.
Auto Loans: Auto loans are used to finance the purchase of a vehicle (read Honda Accord if you work with KPMG), if you know you know. Like mortgages, auto loans typically require the vehicle to serve as collateral.
But why do you need to take a loan if you have a steady source of income?
You may need to take a loan to fulfill immediate significant financial goals or address unexpected expenses.
Loans provide access to funds that you may not have readily available
Would you rather wait till your next salary date before buying that iPhone?
Take a loan and buy it now, by the time your savings is complete the prices could have gone up and you’ll have to keep hustling like the hamster on a wheel.
You might not want to pay interest but trust me, paying 15k on a 100k loan is better than waiting to save 100k and the price of the phone has increased to #230k.
Please don’t ask me which iPhone is 100k, 🫣 take the loan and buy what you need now
Taking a loan can be very sweet because you have money that you “did not work for”, but there are a few things to look out for.
In the world of loans, there are scammers who promise you the moon but only deliver the stars. They might ask for money upfront before giving you a loan, leaving you with a financial loss and no funds. It’s like being sold a ticket to a concert that never happens, you’re left with an empty wallet and a broken heart. Sorry for you.
Loan clauses can be like the hidden messages in a Nigerian text message, full of extra charges and consequences for defaulting on payment. Before taking a loan read the terms and conditions. Read the contract before signing it, to ensure you’re not agreeing to something you’ll regret later.
The Debt-to-Income Ratio (DTI) is like a financial health check. It looks at how much of your monthly income goes toward paying debts. Aim for a low ratio, around 30%, this indicates your debts are manageable. Beware of loans that might significantly impact your DTI, as it’s like trying to fit a square peg into a round hole, leading to financial stress. Imagine earning 200k per month and using 150 to repay loan monthly, you go just dey explain explain explain, no evidence.
Compare interest rates and additional fees before taking out a loan, especially in Nigeria, follow these steps:
Understand the APR (Annual Percentage Rate): The APR measures the total cost of borrowing over a year, including interest and additional fees. A higher APR indicates a more expensive loan. Always look for the APR when comparing loans to get a clear picture of the total cost
Compare Interest Rates Across Different Lenders: Interest rates for personal loans in Nigeria can vary widely, from as low as 5% to as high as 30%. Use platforms like Lendsqr to compare interest rates from multiple lenders with just one application. This helps you find the best loan offer without the hassle of comparing options individually.
Consider the Loan Amount: Higher loan amounts often have lower interest rates, and vice versa. This is because the risk is spread over a larger amount. Therefore, the size of the loan you’re applying for can significantly affect the interest rate you’re offered.
Check for Additional Fees: Be aware of any upfront fees, late payment fees, and penalties. Legitimate lenders may deduct fees from the loan amount or add them to repayments. However, be cautious of lenders who ask for money upfront before providing the loan, as this could be a sign of a scam(I’m saying this again oo)
And when you get the loan, use it for what its meant to be used for
Don’t play sure odds, don’t go to W-bar, avoid unnecessary spending.
If you don’t pay, Olokpa ma ko everybody, you can read more here on consequences for defaulting on a loan
Happy borrowing, and may your financial endeavors be as prosperous as they are purposeful!
Stay happy and stay hydrated ✌️
