Loans can help you solve real problems — but only if used wisely. Rushing into the wrong loan can damage your finances for years. Here’s how to avoid the most common mistakes.
- Never borrow more than you need. Extra money may feel good now, but you’ll pay interest on every naira. Borrow only what you can repay comfortably.
- Avoid payday loans and quick-cash lenders. These loans often come with extremely high interest rates (up to 50%+ per month). They may look easy but trap you in debt cycles.
- Check for hidden fees. Processing fees, early repayment penalties, account maintenance charges — even small percentages add up. Read all terms before signing.
- Understand the interest type. Is it flat, reducing balance, or compound? A 24% flat rate is very different from 24% reducing balance. Ask for the full repayment schedule.
- Don’t ignore the repayment timeline. A short-term loan with big monthly payments can crush your budget. Make sure the loan duration fits your cash flow.
- Avoid applying for multiple loans at once. It lowers your credit score and shows lenders you may be struggling. Apply only after you’re sure of your choice.
- Ask questions. If anything is unclear — fees, rates, conditions — ask. Don’t sign what you don’t fully understand.
👉 A good loan helps you build. A bad loan creates stress. Be informed, stay alert, and borrow smart — your future self will thank you.