Things to consider before taking a loan from apps like Okash.
Let’s be honest, most of us have been caught between a rock and a hard place financially and in desperate times you would consider getting a loan app. Unfortunately, a lot of Kenyan mobile loan apps are unregulated which means you end up risking your privacy and some even harass you.
Recently, Citizen TV aired an interview of a pastor who had been put as a guarantor by one of his congregants, the app agent ended up calling the pastor endlessly and this led to Kenyans on Twitter reacting where #DebtOfShame was trending. The most popular app that is known for harassing clients happens to be Okash in its way of recovering debt.
This now leads us to our next options, which things do you need to consider before taking a loan?
Why do you need a loan?
First of all, what do you need to loan for? Determine what you need it for, how much you need, and when you’ll be able to pay it back. Only take a loan if you absolutely need one (emergencies, meeting a business goal, etc.) and have a plan to pay it back.
What is the fee or interest?
Loans (and overdraft services) are not free. There is a fee to access the loan. Make sure you know what your fees are.
In addition to fees or interest, some loans have other fees that could be attached to how you repay or maintenance fees. Most loans will also charge a late fee if you do not repay your loan on time. Read all your terms before taking a loan!
1.How much time do you have to pay the loan back?
Your loan term is not forever.. You are required to pay back your loan within a specific period of time. Make sure that before you take out your loan you know exactly how much time you have to repay your loan so you can plan your finances.
2.How will you repay your loan?
Before you take out a loan, make a plan to repay it. You can adjust your living expenses to plan ahead and know exactly what you need to do to gather those funds. This will ensure that you don’t get caught with additional fees.
3.What is the repayment process?
Each loan has a different repayment process. Some may require you to go and visit a bank, others may allow you to transfer mobile money. Some loans, like Tala, allow you to make partial payments so you can repay your loans little by little. Make sure you know exactly what is required to repay your loan before your loan due date so you know if you have to give yourself time to prepare to repay.
4.What’s the penalty if I don’t repay on time?
If you fail to repay your loan, most loan services will require you to pay a late or extension fee.
Overdraft is a service that allows you to overdraw your account balance below zero. You are required to repay the negative balance, with a fee. Overdraft services will withdraw your balance immediately when you deposit money into your account. If your service has a compounding fee, the interest on your loan will grow continuously.
Knowing what service you’re agreeing to is important because the type of service impacts the fees and time required to repay.
5.What kind of information do they need you to give?
What kind of information do they need from you? If an app is asking to gain access to all your contacts and even have the right to call anyone from your list then this is something you should worry about and wonder if it’s really necessary.
Getting our of debt is not the easiest thing to do but you should remember that the only time a loan makes sense is if there’s an emergency or if you know you’ll get back a return.