How much do you know about loan application mistakes, how to avoid them altogether and what to do if you ever find yourself making some of these mistakes?
Meanwhile, before we proceed, we would like to highlight the fact that 4 years ago, the Central Bank of Nigeria published a list of 63 licensed finance companies. Today, this number has grown tremendously.
What this simply means is that you now enjoy easier access to affordable finance stress-free. This increases your chances of finding a loan and that truly and realistically works for you.
Another thing that can truly hurt your chances of getting a loan is making avoidable mistakes while trying to apply for the loan. This article focuses on some of these mistakes and how to prevent them from ever getting a chance to come back to haunt you. Let’s get started.
Providing a Wrong BVN
Entering a wrong BVN into a registration form while trying to apply for a loan is a huge red flag and you are likely to get blacklisted if you ever find yourself making this mistake.
The best way to get past this is to pay special attention to your BVN before you input it into your profile or registration form.
Adding a Card Not Profiled For Online Transactions
We should state here that not all debit cards are profiled for online transactions. While completing your profile for a loan application, you must ensure that the card you intend to add has been profiled for online transactions.
If you haven’t done this, you can fix that by getting in touch with your bank and ensuring that your card can be used for online transactions.
Trying to Add a Card With N0.00 Account Balance
For online transactions tied to applying for a loan and getting your bank account credited, it’s important to have some money in the account just to verify that the account can be used.
For example, to successfully apply for a loan on the ‘Money In Minutes’ website or app, you are expected to have a minimum of N50 inside the bank account linked to the application. What you must understand is that even when the money is debited from your account, it is reversed and you get the money back inside your bank account.
Trying to Add a Single Card Multiple Times
As simple as this might sound, it could cause you a ton of headaches. No matter how many consecutive times you try to add your card after 3 failed attempts, it will continue to return an error message to you.
For instance, with the Money in Minutes app, adding the card after waiting for a minimum of 24 hours will also resolve the issue. This is specifically designed to protect your account from unauthorised access.
Applying For a Loan You Can’t Repay
Let us kick this off with an example. If you earn, N100,000 monthly and you apply for a loan of N1 million to be repaid in 6 months, how exactly do you expect to repay?
We should point out here that loan repayments happen monthly. As such, if your monthly repayment breakdown does not cover the entirety of the loan, you’re simply setting yourself up for a rejection of your loan application.
Believing You Can Repay With the Entirety of Your Salary
If you earn N50,000 monthly, you can’t expect to commit 100% of your salary into a loan repayment plan. It is not done this way.
Only a percentage of your salary can be dedicated to the repayment of your loan. In most cases, your monthly debt payments should not exceed 36 per cent of your gross monthly income. Ideally, the percentage should be around 10 per cent. However, if it is less than 20%, you would still be largely considered to be in a good shape financially.
Not Completing Your Registration or Loan Application
This is simple logic but we still need to point it out. A consumer finance company like MIM can only give you a loan if you ask for it and the way to ask for it is by applying for the loan.
Are you in need of quick cash to take care of a pressing need, simply install the MIM app or visit the website
Assuming Lenders Offer the Same Interest Rates
One thing you can take advantage of here is risk-based pricing. What this does is that it offers you an opportunity to access lower interest rates. At Money in Minutes, for instance, having a good credit score helps you unlock this feature. When you take a loan and repay, you improve your credit score. This, in turn, helps you unlock more robust loans and lower interest rates.
For instance, with a good credit score and an early repayment period, you can access lower interest rates compared to someone without a credit score applying for the same loan.
Ignoring Terms and Conditions
Some loans come with Other Terms and Conditions (OTC), which differs from the Terms and Conditions (T&C) that most people tend to focus on.
The irony here is that for such lenders when a loan goes bad, the OTC matters much more than the T&C as it usually contains details of what you can expect to happen in the event of a default.
Not Exploring Loan Refinancing Options
If you believe that the terms of your current loan are not favourable to you, you can always approach the financial institution to restructure your loans.
Please note that you can enjoy this feature when you are servicing your loans promptly. We should add here that the process of refinancing your loan involves approaching another bank to take over your existing loan as a new lender.
Final Thoughts on Mistakes to Avoid When Applying For a Loan in Nigeria
Now that you know the mistakes to avoid when applying for a loan in Nigeria, you are in a better place to make more informed decisions. The goal here is to take you several steps closer to attaining financial well being.
To begin your loan application process, click HERE