How to spot a destructive small loan

It’s an awesome idea to opt for small loans to build your credit score! We agree!

But here’s the thing; many predatory lenders are eagerly waiting to get hold of anyone who’s in desperate need of a QUICK loan.

And because you’ve been our day one we’re going to tell you 3 red flags you must watch out for before you transact with any lender:

A predatory lender is out to take advantage of anyone who’s in desperate need of a quick fix, so they are likely to give out small loans with ridiculously high-interest rates.

Take, for instance, you have plans to take out a loan of N5,000 and a lender offers an interest rate of 50%, at first having to pay N2,500 on N5,000 might not seem like a big deal to you but the more you stew on it the clearer it’ll become. A 50% interest rate on such a small loan could be likened to daylight robbery and any lender who offers you such either expects you to be ignorant or desperate.

This over-inflation of interest rate on small loans is a big red flag for predatory lenders and could cripple your finances.

We know that to get approved for any loan there are important documents that should be provided and your bank statement/credit report is one of them.

So for a lender to jump straight to giving you a loan without any strict checks is really fishy isn’t it?

A high credit score is needed to be considered loan-worthy, especially for a large loan. Predatory lenders will try to play off this fact and get you to agree to a loan term outside your comfort zone with false promises of “your credit score doesn’t matter”. (This, my dear friend, is the first of many signs that this lender is setting you up for a destructive loan. FLEE!).

A credit report check shows more than just your borrowing and repaying, it also shows your spending and earning capability, and helps the lender provide the best loan terms for you.

For a lender to ignore your creditworthiness, no matter how small the loan is, is cause for concern (It’s giving we-don-catch-am vibes).

When you are given very long or very short repayment terms, it becomes a big problem.

A very long repayment schedule will mean that your interest gets higher as time goes on and it might even get to be equal to your principal(i.e original amount — interest rate).

While a very short loan repayment term can cause problems for you as you stand the risk of being unable to pool your funds together due to a lack of time. This is why an ethical lender ascertains the right repayment schedule for you through thorough checks on your credit history, bank statements and overall finances, leaving enough room for flexibility. Unlike the predatory lender whose methods of lending usually ties you to a destructive loan.

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Irorun understands that emergencies have a way of disrupting plans and making anyone susceptible to manipulation from predatory lenders and their destructive loans.

And that’s why we’ve shown you what to look out for in cases like that. Remember we’re only a message away from setting you up with the loan that’s right for you.

Send us a message at support@irorun.com to get started!