There are tens of loan apps in Kenya today. If you are stuck somewhere with no money, all you need to do is download one of the several loans apps and voila, you will get money in your Mpesa account within seconds. Quite fast and easy I must say. But ever heard of easy come, easy go? Such is a perfect example of the money you get from these loan apps.
Well, in times of dire needs, you will be grateful for these apps. But then, you should only use these apps after you’ve exhausted all the other options. I know we don’t like borrowing money from friends and family (I loathe it too), but these apps are more of some sort of slavery. You borrow today, tomorrow, the day after tomorrow, and the cycle continues.
Now, if you ever cared to closely analyze the benefits as well as the downside of loan apps, you will seriously work towards redeeming yourself from debt – even if it means asking for prayers. Just have a look at some of the disadvantages of borrowing money from loan apps:
1. High interests
Boy, aren’t these apps mining money from our pockets? The owners must be filthy rich. Tala, for instance, charges a 15% interest for a 30-day loan and an 11% interest for a 21-day loan. This means that if you borrow Ksh 10 000 and choose to pay after 30 days, you will end up paying a total of Ksh 11, 500. Not to mention that the facilitation fee is all on you.
2. Dare default and your friends and family will be on the know
We are not encouraging defaulting by any means. But make your choices wisely if you must borrow money from loan apps. If you default, the money lenders will not only be on your neck but they will also follow up on your contacts to know why you are not keeping the promise.
3. It makes it harder to get out of debt
The fact that the interest rates are too high makes it even harder for someone trying to get out of debt. Some banks offer loans for at an interest rate of only 4% and you can also get help from friends without any interests. You will have to be really good at repaying if you choose to borrow from friends and family.
4. It becomes addictive
Once you get into the habit of borrowing money from these apps, it becomes addictive. Each time you pay, your loan limit goes up encouraging you to borrow even more. The best thing is to uninstall the app as soon as you repay the loan.
5. More apps
And once it becomes a habit, you download more loan apps. So you will be borrowing money from one app to make payment to another.
6. You borrow money unnecessarily
Even when you can wait for a few days to get your salary, you will not want to wait knowing that you have an app that can give you money instantly.
7. Annoying reminders
Even before the due date, you start getting messages reminding you to repay your loan. And the most annoying thing is that the messages come early in the morning while you are still asleep.