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The negative side of digital lending apps.

Financial trap

The biggest lesson in life is when we learn from our mistakes and downfalls. I’ve read so many financial books and watched so many stories of how people who had it all in life went from grace to grass and summarized that into one aspect i.e., lack of financial knowledge and living beyond our means.

When the mobile lending apps blew, they offered a glimmer of hope to many Kenyans who had problems accessing loans from the regulated financial sectors. Kenyans were left with no alternative but to seek financial assistance from lending apps which usually charge high-interest rates and tough penalties compared to the banks and SACCOs.

Kenyans with no financial understanding ended up suffering at the hands of the lending apps through high-interest rates and unwanted calls from unprofessional debt collectors who sounded arrogant and acted as if they are holier than thou when it comes to matters' debts.

Just recently, I did a small research among my close friends and random people just to have a clear picture of how deep mobile money lending is. to my surprise, almost ¾ of the people I had a conversation with had loans running loans with different lending bodies.

Taking a loan is not an issue, the issue is how the money was spent, and how fast are you able to repay the loan. High-interest rates and penalties are one way of making the poor poorer. I cannot vindicate myself for having borrowed money from the lending apps and failed to pay on the due date. It’s not a position one would love to be in, the constant calls from strange numbers and text messages from people I view as unprofessional made me regret that decision.

As I conclude, I would highly discourage people from borrowing from unregulated lending apps. I’d rather borrow from a bank or through Mshwari and KCB-MPESA. The former is a financial trap that if we are not keen, we would see ourselves draining our resources to service the loans.

Some days back in a queue, I overheard a conversation between two men who looked mature to me, and from their conversation, I sensed the fact that we are staring at a big financial breakdown among many Kenyans. The majority of the young Kenyan population is already listed at the credit reference bureau because of failing to meet their obligation of repaying loans from different financial sectors be it regulated or unregulated sectors.

My question is, ‘’How will they be able to access funding with their current credit status’’? it will be impossible or next to impossible when they want to undertake a financial project but are unable to access funding because of their credit score. Mobile lending apps inasmuch we love borrowing from them because of how easy it is, we forget to counter-check the interest rates and how vulnerable we became when we allow third parties to access our information.

Lastly, failure to repay the loans has consequences on credit rating by credit reference bureaus a thing that in you want to access loans from the banking sector will have you denied because of the rating. To all those who have ears let them hear.

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