A payday loan is a type of short term high interest loan loan based on a borrower’s income profile. A payday loan’s principal is typically a portion of a borrower’s next paycheck. These loans charge high interest rates for short-term immediate credit. Payday loans in Nigeria are widely popular and provided by lenders including banks, moneylenders and microfinance institutions.
Obtaining a Payday Loan
Payday loan providers are typically moneylenders with physical locations that allow onsite credit applications and approval. Some payday loan services may also be available through online lenders.
To complete a payday loan application a borrower must provide paycheck from their employer showing their current levels of income. Payday lenders often base their loan principal on a percentage of the borrower’s predicted short-term income. Many also use a borrower’s wages as collateral. Other factors influencing the loan terms also include a borrower’s credit score and credit history which is obtained from a hard credit pull at the time of application
How much can you borrow?
Typically up to N500,000, although some lenders restrict the size of the first loan they will offer. Loan periods start at less than a week and in some cases run to months. Social lender for example, offers borrowing over five days to five months, while Zedvance’s loan period starts at just a day and the maximum varies throughout the month. There are not usually early repayment charges, but there are fees for setting up the loan, as well as interest, which is usually calculated daily.