What you should know about loan penalty charges

Do you know why Nigerians struggle with paying back the money they borrowed?

IMPUNITY. Yes! Most borrowers believe there are no consequences for defaulting on a loan.

Source — We no fit lie give you.

You may or may not know that most lenders also finance the money they lend to you from other sources and as such they can’t afford to forfeit. (Pity lenders, it’s really not a charity organization).

And that’s why there are PENALTY CHARGES for defaulting on a loan.

PENALTY is the fine that lenders apply to borrowers who don’t pay back on time. It’s a common charge by lenders globally and also in Nigeria.

Irorun wants you to be aware of all that is involved in applying, accessing and repaying a loan. Read further to find out what you should know about loan penalty charges:

Although not widely known, each lender has different rates on their penalty charge. This charge normally ranges from 1% to 5% of the principal + interest for late payment and while this may be true for one lender, it may not be for another. Usually, the penalty charge is computed every day after a number of days the loan has gone past due. This is what is usually called the Grace Period. Fall from grace, and the penalty comes to you like a hammer.

Each lender’s charge varies, so before applying for a loan, you should take the initiative to find out what the lender’s fees are. Knowing what could happen when you violate loan terms can help you plan for future emergencies that may make you financially unstable and render you unable to pay back loans. (So that you’ll not say “They’ve stolen extra money from you” meanwhile you didn’t ask questions).

Money no dey×2, you dey add extra wahala on top the one you get

The reason you may want to take out a loan or have taken one already owes to the fact that your financial standing at the time isn’t the best for one reason or the other, that is, you don’t exactly have the cash in hand or your bank account.

So imagine having to pay back extra on a loan that is already a hassle to repay, it will certainly put a dent in your low finances.

This is one reason you should endeavor to pay back your loan on time or request for a restructuring of your repayment terms if you are unable to repay the loan with the current terms. Here’s what to do if you can’t repay your loan when due.

Remember “Credit Score = Creditworthiness (Loan Worthiness)”.

Your penalty payments are added to your credit history and this can end up lowering your credit score. If there were times that you owed long enough to be charged a penalty then there’s a good chance it’ll reflect in your credit history. Remember that your credit history is what helps in calculating your credit score, so with each penalty charge, there is a reduction or stagnancy in your credit score. (Lenders go begin dey run from you if your credit score low o!).

You may have paid up your debt, but the one time it went unpaid is still taken into consideration and this lowers your credit score, you become ineligible for larger loans. Not to worry, Irorun can show you how to boost your credit score.

As you now know, your credit report is an important aspect of the loan application process and can be the reason you end up being unable to take any more loans.

Well, the reason is more than your credit report, after all, it only reflects what you have or haven’t done.

When you end up penalized for a violated loan term, it ends up on your credit report (even if it is rectified), this same report is used when applying for other loans.

Lenders are put off by the history of multiple penalties in your credit report and this affects your chances for future loan approvals. Every penalty present on your credit report is a stain on your reputation as a borrower and lenders will always be wary of bad borrowers.

…

Irorun, like other responsible lenders, may apply a penalty to you if you don’t pay back on time and you never discussed restructuring with us.

And that’s why you can always reach out to us at support@irorun.com to inquire about our loan process as well as restructure your loan terms.

Better safe than sorry right?

Send us a message now!