A moneylender typically offers small personal loans at high rates of interest and is different from banks and financial institutions that typically provide such loans. The high interest rates charged by them is justified in many cases by the risk involved.
They play an active role in lending to people with less access to banking activities, such as the unbanked or underbanked or in situations where borrowers do not have good credit history.
In Nigeria, the regulation of money lending has been delegated to the various States of Nigeria since 1990. The CBN does not directly monitor the activities of these moneylenders, but it regulates the banks, micro-finance, mortgage and other lenders.
loans from moneylenders are designed to be short term loans of N10,000 to N100,000 that are designed to tide you over to the next payday.
They’re usually used to meet emergency costs, eg boiler repair, that you otherwise couldn’t meet from your monthly salary or savings.
Generally, you will need to agree that the company can take its payment from your account on the day your next salary payment falls due, though some lenders will allow you to pay a longer period – often up to six months.