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My Money Mistake: I Have Been Stuck Servicing Loans For Two Years

My Money Mistake is a weekly PiggyVest series that explores the worst money mistakes real Nigerians have made, and the lessons they learnt from it.

For this week’s episode of My Money Mistake, we spoke to a hair vendor who has been servicing loans for about two years now. She tells us about how she got into the web of loans, the impact it has had on her, and her regrets about the experience.

Could you tell me about your money mistake?

My husband gave me the capital to start my hair business, but at the beginning of the business, I struggled because there was increased competition in the business.  So I took a loan of ₦400,000 to pivot to a more lucrative part of the hair business – human hair. Things went well, but I didn’t make the kind of interest I thought I would. This affected my ability to pay back the agreed ₦544,000 at ₦68,000 per month for 8 months.

So I had to take another loan to meet up with the deadline, and another one, and another one. As I speak, I’m servicing 5 loans. 

I’m sorry about that. How’s revenue with the business still?

The business is not doing badly, but income isn’t regular. During the election season, for instance, sales were really low, so I found it really hard to meet up with my loan repayment for last month.

Was there ever a time when the business was booming?

Yes, and that’s why I wasn’t initially worried about the loans. Throughout last year, I conveniently paid off my loans on time. 

Have the loan companies reached out?

I have never defaulted on any loans. I’ve been taking other loans, just to avoid defaulting on any. 

What kind of impact does that have on you?

No amount of money I make is really for myself. In a month, on average, I make a little over ₦300,000, but most of it goes into repaying the loans. It even affects my ability to keep constant stock in my shop. 

And anytime I notice my store is getting empty, I have to source for loans to get more stock. If I’d been able to settle these loans, I would be very fine and be able to expand my business. 

How long have you been servicing loans?

It’s been two years now. 

Oh wow! That must be stressful.

It is so stressful, a long life of hypertension. 

You mentioned that your husband helped with the capital for the business, has he been involved in the loans?

Sometimes, when I am unable to meet deadlines or when I need to stock up the shop, he helps with his own input. But of course, it’s only after expressing his reluctance or resentfulness about the situation. 

He’s trying his best, and I don’t want to put too much stress on him. That’s why I’m trying to take responsibility for my issues by myself.

Do you regret getting into loans

It’s a big regret. It all started with one loan. If I had been patient and saved bit by bit, I would be enjoying myself now. It was a very wrong decision. 

Is there an end in view?

If I don’t get any other bad business month, everything should end by the end of this year. I pray that it’s the end.

What did you learn from this experience?

I learnt to never dive into a loan that I can’t pay back, and I should never go into phone app loans. Most times, all it does is keep the person in a web of debt. If you need loans, go to a microfinance bank where the interest rate on loans is reasonable. 

Have you considered getting a loan from a microfinance bank?

Yes, I have. I’m currently servicing one, and it’s not stressing me like the others. 

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