If you’ve ever lived in Nigeria, you know how difficult it can be to get a loan. There are many options if you’re looking for an installment loan, but the process can be time-consuming and frustrating.
But let’s see some Nigeria statistics that will tell you more about the context.
- With a population of over 190 million, Nigeria is one of the most populous countries in Africa and the 7th most populous country in the world. It makes it an ideal place for a loan to be made, as there are plenty of people who need loans.
- Nigeria has a high unemployment rate of around 20%, meaning many people are looking for ways to make money. Loans are one way they can do this, and they can also help people get started with their business ideas or cover some significant expenses.
- You can get up to $1,100 as an installment loan in Nigeria, up to 500,000 Nigerian Naira.
- Besides an ID card or driver’s license, you must also bring passport photographs to apply for an installment loan.
However, installment loans are easier to obtain in the United States than ever before. You can apply online and receive an approval within hours. If you’re looking to borrow money—whether for a car, home, or a business—you might be interested in some statistics about loans in the USA.
- The average amount of credit card debt among borrowers is $7,279.
- The median credit score for people who took out installment loans was 698 in 2022.
- In the USA, paying off student debt takes about three years if you make monthly payments of $250/month and use a 10-year repayment plan.
- Nearly 6 in 10 borrowers (58.3%) take out a personal loan with monthly installments to consolidate debt or refinance credit cards. The next-closest reason is home improvements (6.2%).
How much money can you get, and with what repayment period?
In Nigeria, installment loans are often taken out for about 15 months. The average interest rate is around 11.5%. The average amount borrowed is usually approximately 100,000 Naira (about $160).
In the United States, loans are typically taken out for 24 months. The interest rate varies widely depending on what type of loan you’re getting and how much money you’re borrowing. The minimum APR is 2.5%, and the maximum reaches 36%. The maximum amount borrowed by Americans for installment loans varies from $5,000 to $15,000.
The requirements to qualify
The requirements to qualify for a Nigerian loan are very different from the requirements you would have to meet if you were applying for an installment loan in the United States.
In Nigeria, you need to provide the following:
- An ID Card, a driver’s license, or other valid means of identification;
- Employment status proof: contract review document, employment letter, or a promotion letter;
- A recent utility bill;
- At least a fair credit score (580 – 669), but there are also bad credit lenders in Nigeria;
- A 3-months bank statement;
- Passport photographs.
In the USA, there are almost the same eligibility criteria:
- At least 18 years old;
- At least $1,000 per month;
- Steady employment status;
- A driver’s license, passport, or national ID card;
- A valid bank account;
- At least a fair credit score (580 – 669), but installment loans with bad credit are also available.
- Collateral (real estate, vehicle, or other valuable properties if needed).
The methods of applying for a loan in Nigeria vs. the USA
In Nigeria, there are various loan application methods depending on the lender and the type of loan you seek. However, here are some standard methods of applying for a loan in Nigeria:
Online application: Many lenders in Nigeria now offer online loan application services. This method is becoming increasingly popular due to its convenience and speed. To apply for a loan online, complete the application form and visit the lender’s website. Once you submit your application, the lender will review it and notify you of their decision.
In-store application: You can also apply for a loan by visiting the lender’s office. This method lets you discuss your loan needs with a loan officer who can guide you through the application process. You’ll receive the money instantly. This way you can buy a car on a loan in Ghana.
Mobile application: This method allows you to apply for a loan using your smartphone or tablet. You must download the lender’s mobile application, fill out the application form, and provide the required supporting documents. Once you submit your application, the lender will review it and notify you about the approval.
Loan agents: Some lenders in Nigeria work with loan agents who can help you apply for a loan. These agents may work independently or be affiliated with the lender. They can guide you through the application process and help you provide the required supporting documents. They may also help you negotiate the loan terms with the lender.
Here are some of the standard methods of applying for a loan in the USA:
Applying online: Many lenders in the USA allow you also to apply for a loan online. You can visit their website, fill out an application form, and submit it online. The lender will review your application, and you’ll get the answer via email.
Applying in person: Some lenders prefer that you apply for a loan in person at their office or branch. This option allows you to speak with a loan officer and get help with the request. However, Americans receive the money via a written check.
Applying over the phone: You can also apply for a loan by calling the lender’s customer service number. A loan officer will assist you with the application process and answer any questions.
Applying through the app: You download the app, create an account, then link it to your bank account. Once you submit the application form, the app transfers the loan amount to your bank account within several hours.
Applying through a peer-to-peer lending platform: Peer-to-peer lending platforms are online marketplaces connecting borrowers with investors willing to lend money. You can apply for a loan through these platforms, and investors can decide whether or not to fund your loan request.
Credit score differences
The credit score systems in Nigeria and the United States differ significantly due to differences in the credit reporting infrastructure, credit usage, and regulations.
In the United States, credit bureaus like Equifax, Experian, and TransUnion collect and maintain credit information on American citizens. They assign a credit score ranging from 300 to 850 based on payment history, credit utilization, length of credit history, types of credit accounts, and new credit inquiries. A higher credit score indicates better creditworthiness, resulting in easier access to loans and credit cards and lower interest rates.
In Nigeria, the credit reporting infrastructure is not as well established as in the United States. The Central Bank of Nigeria (CBN) regulates credit bureaus, and currently, only three credit bureaus operate in Nigeria: Credit Registry Corporation, CR Services, and First Central Credit Bureau. These credit bureaus collect credit information from lenders, such as banks, and assign credit scores to individuals based on credit history, loan repayment behavior, and credit utilization. The credit score ranges from 300 to 900, with a higher score indicating better creditworthiness.
Another significant difference between the two systems is credit usage. In the United States, credit is widely used for various purposes, including buying a car or a home, paying for education, and starting a business. Credit cards are also widely used for everyday purchases. In Nigeria, credit usage is relatively low, and many people still rely on cash transactions.
Regulations also play a role in credit score differences. For example, in the United States, credit bureaus are regulated by the Fair Credit Reporting Act (FCRA), which sets guidelines for collecting, using, and disseminating credit information. Individuals also have the right to dispute errors on their credit reports and request a free copy of their credit report every 12 months. In Nigeria, the CBN regulates credit bureaus and sets guidelines for credit reporting.
Bottom line
In conclusion, installment loans are a popular option for individuals and businesses needing quick access to funds. However, while the basic concept of installment loans is the same in Nigeria and the USA, some critical differences exist between the two countries’ installment loan markets.
Regardless of where you are located, it’s essential to carefully consider the terms and conditions of any installment loan before you apply. Ensure you understand the interest rate, repayment terms, and any fees or penalties involved. With some research and planning, installment loans can be a valuable tool for achieving your financial goals.
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