Quick relief or debt trap?

• Nigerians narrate risks of quick loan apps

By Kehinde Aderemi

Nigerians are going through a lot these days. With the advent of the fast-growing digital lending sector, cases of harassment and increasing interest rates from lenders and managers of online loan apps and the need to regulate their activities have continued to generate concern for Nigerians.

Sequel to the unexpected increase in the numbers of the digital money lenders, the Federal Competition and Consumer Protection Commission (FCCPC), in conjunction with the Central Bank of Nigeria (CBN), last year published a list of more than 100 newly approved digital money lenders.

According to the report by the FCCPC, it was gathered that scores of these digital money lenders have met regulatory requirements and are authorised to operate.

The FCCPC also set a deadline of Jan 5, 2026, for all the digital lenders to fulfil registration requirements, even as it threatened to restrict non-compliant firms.

The move, it was gathered, was to protect consumers and ensure proper transparency in Nigeria’s fast-growing digital lending sector. The approved digital apps, including FairMoney, Opay, OKash/EaseMoni, MoniPalmCredit, Branch, QuickCheck, RenMoney, and Carbon, among others, it was learnt, are expected to comply with data protection and ethical practices – a regulation guiding the practices of digital banking and lending procedures.

But despite the CBN’s regulation that all digital lenders should adhere to strict ethical guidelines and not engage in harassment or privacy violations, there are reports that the online lenders have drifted from their initial responsibility.

Victims of the quick loans apps have continued to lament as they described the procedures as nothing but a debt trap. They insisted also that the digital lenders have abandoned their initial business ethics and are now extorting their victims.

For instance, a lender who craved anonymity narrated his experiences as he lamented the increase in the interest rate charged by an online loan app. He described the loan as a trap but noted that he would not pay such a crazy increase.

According to him, he borrowed N20,000 on August 22, 2025. After 247 days, his outstanding balance stood at N86, 269.36.

“They lent me N20,000 and they showed that I would pay N86,000. They wanted to dupe me.

“I can’t pay back what I did not borrow with such interest. I’m literally not using the bank and they are not even calling. I think they’ve given up on me,” he said.

Adesola Alani (not real name) is another victim of the online app loan. He recounted how a loan app recovered its debt without warning.

“They took my money from another bank. I borrowed money from GTBank and after a year it was deducted from my Access Bank account. I nearly cried.

“At the appropriate time they will activate GSI and collect their money from any of your accounts with money,” he explained, even as he urged lenders to pay their debt now in order to avoid the daily accruing interests,” he said.

Narrating his experiences, Lagos-based business man, Sunday Usulor, said he would never advise even his enemies to take online loans.

Usulor blamed the situation on the state of the economy, but added that many of the loan apps are created to make big profit at the expense of the people.

“I won’t advise my enemy to try it. I tried it twice and I have vowed never to try it again.

“It was not a good experience. I would not advise anybody to try it — not even my enemies,” he said.

Usulor described how the managers of the loan apps lured users into taking quick loans which could later become a debt trap.

“Nigerians fall into the trap because of the poor economic situation, and the apps managers are using the system to exploit their victims.

“You see many of the loan apps on your phone advertising and urging you to take a loan. Sometimes they will call you personally. You wouldn’t know where they get your number from. You have so many millions to collect,’’ they say.

Usulor said the ugly experience with the online loan lenders started when an online app promised to give him N500,000 loan with a meagre interest of N900 interest in just 90 days.

“I jumped at the offer and I requested the loan, but they said I wasn’t eligible. So, they gave me another option, which was N40,000.

“So, they started requesting my confidential information like my BVN, and I gave them. They asked for my ATM PIN and I did. Finally, they credited me with N40,000.

“But to my surprise, immediately they credited my account with the sum of N40, 000, they sent my daily interest rate.

“I tried to return the money that night, but there was no way. They can only call you, but you can’t reach them. After a week, they started sending messages. That got me angry.

“I don’t encourage anybody to take online loan and I think government has to do something about it. Though people cite the economic situation as reason for taking the loans, there should be regulation for the loans, especially on payment and interest rates. They have access to BVN, ATM PIN and other important information. These are the risks.” he stated.

Mr Daniel Igho Alfred, an estate management consultant pointed out that the disadvantages in taking online loans are more than the advantages.

According to him, the loan recovery strategy was damning because there is no tangible collateral except one’s banking information.

“What’s their collateral? Your phone numbers, BVN, ATM PIN and other identity. That is the core risk. Unlike banks, many loan apps demand no physical collateral. Instead, they harvest data — contacts, photos, SMS, location — and weaponise it. Default by a day, and your pastor, boss, and in-laws may get messages calling you a fraud.

“Though, I know that the FCCPC’s intention for approving these digital online loan apps was genuine, many of their victims still report defamation, outrageous interest, and illegal access to bank accounts.

Alfred stated further that there is a huge gap between policy and the reality on the street.

“Many Nigerians usually get trapped because these quick online loans usually solve emergency problems, but the repayment can be a nightmare.

“There is also a need to check the FCCPC’s list of approved lenders. If it’s not there, delete the app. Read the real cost. A N900 interest can hide daily compounding that turns N20,000 to N86,000. You must also guard your data. No legal lender needs your ATM PIN or phone gallery. And let me say this also that in case there is an abuse, the lender can report the case to FCCPC”, he said.

He offered technical advice to lenders, while urging whoever that is applying for the online loan to first of all verify before engaging in online borrowing.

Meanwhile, in his remarks, a Lagos-based businessman, Mr. Timothy Uwah, said quick loan apps are not illegal. He pointed out that many of the online loan apps are licensed and serve real needs. But he added also that there is a need for deeper understanding because many of the victims, he stated are sharing experiences of relief and ruin.

He warned lenders to be careful, noting that the message is that if it’s too fast, read the lending conditions twice. Perhaps your BVN is the collateral.”

For Salimot Opeyemi, a student of the Lagos State University, Ojo. She admitted that quick loan apps are often called “loan sharks” but they exist because they solve a real problem: the problem of urgency.

“When people are faced with sudden needs, whether for rent, school fees, or emergencies, these platforms offer something traditional banks don’t, often speed and accessibility. Within minutes, money is available, and for many, that feels like relief.

“But that relief comes at a cost. The terms are clear: if you borrow ₦30,000, you may be required to repay it with an interest of about 15–20 per cent within a short period. On paper, it sounds straightforward. You agree. You collect. You repay. Simple.

“As far as I know, life is rarely that simple. The real danger begins when repayment becomes difficult. If someone who needed to borrow in the first place struggles to repay the principal, adding high interest makes it even more unrealistic.

“Then come penalties, daily increases, sometimes around 1 per cent or more. Before long, a small loan becomes a heavy burden. Beyond the financial strain, the consequences can be deeply personal. Constant calls, public shaming tactics, and pressure can affect one’s mental health, relationships, and reputation. What started as a quick solution can spiral into long-term distress.

“So yes, loan apps have advantages: Quick access to funds, minimal requirements, immediate solutions during emergencies, but their disadvantages are heavier: High interest rates, short repayment periods, escalating penalties, as well as both emotional and psychological stress, but my position is simple: if it is not urgent, especially not health related, think twice before using these platforms. Borrowing money when you are already financially strained can create a cycle that is difficult to escape.

“As far as I am concerned, financial help should bring relief, not fear”, she stated.

However, it was gathered that as of early 2026, the FCCPC has tightened its crackdown on digital lenders, introducing the Dion Consumer Lending Regulation 2025 and initiating a massive, renewed review of loan apps. Key actions taken by the agency include mandatory registration, penalties up to ₦100 million for harassment, and strong enforcement against data breaches.

According to the FCCPC, there is a new regulatory framework known as DEON. The new DEON Regulations, mandates strict compliance on interest rates and bans illegal loan recovery techniques.

Findings have also revealed that the FCCPC has intensified its scrutiny, with watch-list figures growing to over 56 apps as of early 2026, following reports of continued harassment.

It was gathered also that FCCPC continuously updates its approved list (now over 164), and works with Google Play Store to remove unregistered apps.

The FCCPC, it was gathered, has also provided communication link for Nigerians, especially lenders to report cases of harassment, data privacy violations, or defamatory messages from loan apps, even as the government agency has reiterated that using personal phone data to threaten or shame borrowers is illegal.