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 41-year-old cement supplier who found herself struggling with debt after taking out a high-interest loan to expand her business. She tells us about how she became trapped in a cycle of debt and her regrets from the experience.
Could you tell me about your money mistake?
I needed some money to grow my business, but I didn’t know how else to go about it, so I applied for loans from a loan app. The interest rates were really high, and I couldn’t meet the deadlines, so I applied for more loans from other companies to pay off my debt.
Now, I owe several loan apps. They are already threatening me for their money. Instead of solving my business problems, it has only made things worse.
I’m sorry about this. Could you give me an idea of how high these interest rates are?
One loan app lent me ₦65,000, but I had to pay back ₦90,000 in a month. Another one gave me ₦26,000 to pay back ₦32,000 in a month, but because I missed the deadline, the amount increased to ₦40,000. Another app asked me to repay ₦31,000 for a ₦17,000 loan in just a week.
How much are you owing in total now?
I owe over ₦170,000 from various loan apps. The companies have been calling and threatening me. They have threatened to post my name publicly and post my obituary on social media. One of them even said they would ensure I never have access to loans in any bank again. I feel helpless and don’t know what to do.
I’m sorry. How has this affected your mental health and business?
I feel like I’m in a mess. Instead of upgrading my business, the loan has brought me down, and my business is worse. I can’t think straight because I receive so many calls from these companies in a day. I regret taking out the loan. These loan apps are not helpful. Instead of assisting people, they add more problems to their lives. Even the little gain I make from the business doesn’t count because I use it to settle loans and the interest on the loans.
How was the business doing before all of this?
I was doing very well. I just needed to increase my supply and expand by starting to sell granite. I used to order about 200 bags of cement before, but the cost increased, so I had to reduce my order to about 100 bags. That’s why I applied for the loan.
How do you plan to repay the debt?
I don’t know. I don’t like to owe people. If I even have the option to pay the exact amount I borrowed, I don’t mind. I will work towards paying it. But the interest they’ve added is a burden. Like I said, my business is also not growing because of it.
My only hope now is that my supplier has promised to assist me by giving me cement on credit, while I pay him when I’ve made sales.
What have you learned from this?
I wouldn’t even advise my enemy to take loans from these loan apps. It doesn’t help at all. It just brings someone down. I’m struggling with the loan, and it’s not helping my business.