Discover how to stay safe from personal loan scams in Nigeria.
Understand the common scams and learn how to protect yourself from becoming a victim.
In the ever-evolving financial landscape of Nigeria, personal loans have become an incredibly accessible resource.
But like a double-edged sword, this accessibility also carries substantial risk for the borrower.
It’s an unfortunate reality that a significant number of Nigerians are falling prey to cunning and unprincipled fraudsters.
These personal loan scams are not just prevalent but are spiraling out of control.
In this piece, we aim to shine a light on these nefarious activities, categorizing the types of loan scams and giving you the tools to identify and dodge them.
Identifying Personal Loan Scams
To protect yourself, you must be aware of the 7 most common loan scams circulating in Nigeria:
Online Lending Scams
Not all digital platforms offering loans are as benevolent as they may seem.
Some are wolves in sheep’s clothing, feigning to offer loans, but their true agenda is to collect and exploit personal information.
This pilfered data might end up in the hands of third parties or be used to infiltrate victims’ bank accounts.
Debt Relief Scams
Under the guise of alleviating burdensome debts, certain scam artists pose as saviors.
They purport to help businesses and individuals clear large debts, thereby extending their repayment periods.
However, once the benefactor pays the upfront cost for this ‘service,’ the fraudsters vanish into thin air.
Upfront Fee Scams
Often, lenders require various processing fees, including insurance and origination fees. These costs differ from one lender to another.
Yet, some fraudsters exploit this norm by collecting the fees and then reneging on the loan issuance.
In these situations, swindlers masquerade as legitimate lending institutions.
Upon application, they seize the applicant’s information to take out loans under their name, thereby saddling the unsuspecting victim with enormous debt.
Typically, lenders vet an applicant’s creditworthiness through consultation with a credit bureau like the CRC Credit Bureau.
If an applicant’s credit report isn’t satisfactory, the loan application is usually rejected.
Some crafty fraudsters, however, trap desperate individuals with poor credit reports, promising them guaranteed loans in return for a fee.
Eventually, these individuals are left high and dry, with no loan and a lighter pocket.
In phishing scams, fraudsters pose as authentic financial institutions, contacting potential borrowers and requesting their bank account details and security pins.
The unsuspecting victims who fall for this scam are left duped and vulnerable.
First Contact Scams
Here, victims are targeted by unknown entities offering attractive loan packages, despite the victims not applying for any loan.
These unsolicited offers often reach potential victims through phone calls, SMS, and various online platforms.
Safeguarding Against Loan Scams
To stay ahead of these fraudulent activities, there are signs to look for and safety measures to adopt:
Always request for any processing fees to be deducted from the loan amount at the time of disbursement instead of paying them upfront.
No authentic lender will pressurize you into taking a loan.
Ensure you’re provided with standard terms and conditions and be cautious of loan offers that appear too advantageous to be genuine.
Any lender guaranteeing a 100% approval rate, unclear about repayment terms, or showing no interest in verifying your credit report is likely a scam.
Look for online reviews and establish that the financial institution is reputable.
Beware of loan application processes requesting sensitive details like your ATM card informati
Standard information required for loan applications are: – Proof of identity: Name, age, address, phone number, ID card, BVN. – Proof of income: 6 months bank statement report.
– Utility bills: Rent, PHCN bills, or water bills. – Credit report (usually obtained by the lender from the credit bureau). Avoid unregistered lenders.
Authentic lenders are insured by the Nigeria Deposit Insurance Corporation (NDIC) and regulated by the Central Bank of Nigeria.
If you suspect that you’re entangled in suspicious dealings, promptly report the issue to your bank and escalate the case to the Economic and Financial Crimes Commission (EFCC).
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Frequently Asked Questions
1. How prevalent are loan scams in Nigeria?
Unfortunately, loan scams have become widespread in Nigeria, with numerous unsuspecting individuals falling prey to such deceptive practices.
2. How can I verify the authenticity of a lender?
Check for the lender’s registration with the Nigeria Deposit Insurance Corporation (NDIC) and the Central Bank of Nigeria (CBN). Authentic lenders are usually regulated and insured by these bodies.
3. Is it normal for a lender to ask for upfront fees?
Yes, it’s common for lenders to ask for processing fees. However, these should ideally be deducted from the loan amount during disbursement rather than paid upfront.
4. What should I do if I suspect I’ve fallen victim to a loan scam?
Immediately report the incident to your bank and also take the case to the Economic and Financial Crimes Commission (EFCC).
5. Are there any red flags to watch for when applying for a loan?
Yes, be wary of lenders that pressure you to take a loan, don’t check your credit history, have no clear repayment terms, or promise a 100% approval rate. These are possible signs of a scam attempt.