According to a survey conducted by the Kenya National Bureau of Statistics, more than 80% of Kenya’s adult population uses mobile money providers, and digital loan services have become an increasingly important avenue for people to access credit, as many are unable to obtain loans from traditional providers such as banks.
So, why do Kenyans find digital loans appealing?
It is easy to understand – These loans offer lower interest rates. The lenders deliver loan to your MPesa within few hours. The loans are installment loans, the borrower knows exactly how much they’ll pay every month and for how long.
What is your experience using loan Apps to borrow money? Have you ever been harassed and ‘debt-shamed’ by a lender after you defaulted?
Ex-Kiss TV host Angeline Wanjeri shares her experience using Loan Apps:
In an interview with YouTuber Lynn Ngugi, Angeline Wanjeri, took her time to share her personal experience with using Loan apps.
According to her, she would borrow money against her belongings. In the process, she lost two refrigerators, two TVs, and her phone, which the loan sharks then sold to recover their losses.
She was living alone at the time after her father purchased her an apartment after she was repeatedly unable to pay the rent on the house she had been residing in.
“I had never budgeted because my dad had always provided for me. I was very irresponsible. My dad then bought me an apartment after seeing how much I was struggling. At that time is when I started using loan apps,” says Wanjeri.
Wanjeri on why she did she not seek help from her family
“I was so ashamed because every time I needed help I would call my dad and he would help. I wanted him to feel like I was now responsible. My salary was at the time very little. My behavior was not changing, I remember I once paid 25K on perfume yet I had not paid my bills. I had almost 12 loan apps,” stated Wanjeri.
During the Covid 19 pandemic, Wanjeri says her salary was cut and things further went south.
“When Covid happen our salaries were slashed, and things became heavy. I found a loan on Items Guy. I would take photos of items and send them on Whatsapp, and he would tell you the value, give you the loan and when paying back you pay interest. One time my house was very empty, I would go on TV, make people laugh and I would go back home to an empty house. It became a toxic cycle.”
Lenders calling her close contacts…
“The loan shark would call people close to me and tell them that I owe them. They texted and called people in my office, my siblings, and friends. Sometimes my phone would ring more than 100 times in a day.”
Wanjeri began rethinking her options when the threats got out of hand. She made the decision to quit her job as her father was compelled to settle her loans.
What lessons can we pick from Wanjeri’s story?
We take a look at factors to consider when applying for an digital loan:
1. Read the terms and conditions carefully
Avoid checking “I agree” on every box. Instead, carefully read the terms and conditions before checking each box. Such an approach will help to avoid unnecessary harassment and stress in the future.
Understand the interest payable, the repayment date, and any specified penalties for late payment, as well as any third-party charges, if applicable. Prepayment fees, loan cancellation fees, and various legal costs should also be considered.
Read Also: Simple ways to avoid defaulting on your loan
2. Evaluate your ability
Despite the ease with which digital loans are available, it is critical to use them properly in order to better your financial status rather than simply buying things you desire and later struggling to repay.
So before applying for a digital loan, evaluate all your monthly expenses and needs carefully. How much do you need? and How much can you afford?
Always, be clear about when you need the funds, for what purpose and how you will repay the loan during the given time.
Additional Reading: Declined Loan Application? What you should know and what to do about it
3. Live within your means
If necessary, draw up a monthly budget to streamline your spending and avoid unwanted or frivolous expenses. A planned budget encourages you to live reasonably well within your means. On the other hand, unplanned spending can increase your debt levels even before you realize what’s happening.
Create a monthly budget if necessary to streamline your spending and minimize unnecessary or frivolous expenses.
A well-planned budget encourages you to live comfortably within your means. Unplanned expenditure, on the other hand, might grow your debt levels before you realize it.
4. Do not use too many Loan Apps
Do not borrow loans from any lender you come across. This will ensure you’re borrowing for the right reasons from the right source. Build your creditworthiness with a legit lender like HelaPesa which offers you quick salary advance.
HelaPesa App is user-friendly, which makes it easy for you to apply for a loan, track your loan status and receive the money immediately. HelaPesa also has a transparent pricing structure, with no hidden fees or charges.
5. Seek professional help
If you’re having trouble managing your finances, it may be beneficial to seek expert assistance. A financial advisor can assist you in developing a budget, creating a debt management plan, and investing in your future. They can also offer you essential counsel and help as you seek to achieve financial stability.
A financial advisor can also assist you in developing a long-term financial plan that includes objectives such as retirement savings, home ownership, and other significant financial milestones.
They can also guide you through the complex world of investing and offer expert advise on the best investment plans for your specific needs and goals.
Remember, while a loan can be a helpful financial tool, it should be used responsibly and within your means. Borrow only what you need and repay the loan on time to maintain a healthy credit score.
By using HelaPesa Mobile Salo Loan, you can overcome short-term financial challenges and achieve your goals with ease.