Why Do Nigerians Fail To Pay Back Their Loan?

Why Do Nigerians Fail To Pay Back Their Loan?

Why do Nigerians fail to pay back their loan? This is a question that has been asked too often lately.

A loan is one thing we all have indulged in. In fact, even I myself have happened to be in need of funds and opt to take loans. It is one thing that has its benefits but also its side effect.

In this article, I will highlight some key factors that make many Nigerian today fail to pay back their loan. So, without wasting much of your time, let’s dive right into the matter of the day.


Any money offered to an individual with an intention to collect later on is called a loan. Depending on the agreement made, it could be paid back with or without interest, whether large or small.

Every since fintech companies and loan apps were made readily available, loans have been largely in circulation. The likes of Fairmoney, Branch, Carbon, Opay, and Aella are some of the best loan apps in Nigeria.

These apps make it very easy to access loans, whether small amounts or large amounts. This is particularly beneficial as it happens to be easier than banks where you have to fill out numerous pieces of paperwork.

Even after filling out these paperwork, chances are you still won’t get your loan request approved. People now turn to loan apps to get their loans, easily as I might add.

Since people find it easy to loan money from these apps, one would think it would be easy to pay back these loans. But this actually isn’t the case.

People fail to pay back their loans for different reasons which I will highlight in the next section of this article.

Why do Nigerians fail to pay back their loan?

There are many reasons Nigerians fail to pay back their loan, they include the following;

1. No intent to pay back

Not all Nigerians who wish to take loans have the intention to pay back their loan. Remember in the section above I mentioned that loans are easy to access with loan apps.

Most Nigerians will take these loans without any idea how they will pay back. In fact, they know they will be unable to pay and they still want to take the loan.

2. Fraud

It may be hard to believe but not all loans are taken is by the owner of the accounts. Most times it happens when fraudsters have access to crucial information.

Fraudsters can use stolen BVNs and create fake IDs to request loans on behalf of the person. Afterwards, they open online banks like Kuda and Carbon to use to collect the funds.

3. Hardship in Nigeria

It is not a new thing that the Nigerian economy is lacking and the country happens to be tough as it is. The prices of things are not the same as they were two years ago.

As of 2020, the value of the naira to the dollar was $1 to 336 naira. As of today, the value of a dollar is more than twice the value. This has affected the economy today, things are getting tougher as the day goes by.

So, even if the person had the intention to pay back the loan, the Nigerian economy isn’t letting them. People have expenditures that are more than what they even earn.

SEE: Why Is The Naira Falling In Value Against The Dollar?

4. Ignorance of the gravity of taking loans

Now, this is one of the main reasons why Nigerians fail to pay their loan. Many Nigerians are just happy having access to loans without understanding how the loan system works.

From my personal experience, once the circle of loans starts, it is very difficult to end. This is because you always know you have access to it once you need it.

It is very easy taking a loan to solve a problem or two when you know you have various apps ready to serve your needs. This is the first part of ignorance of the gravity of taking a loan.

The second part is the repercussion. While it is obvious that the loan company will not do anything to you if you default, there are also some repercussions many Nigerians aren’t aware of.

Firstly, your detail will be given to the Credit Bureau of Nigeria. While most Nigerians don’t care about this, it does have future repercussions. For starters, this means you will be unable to access a high amount or loan from banks or other top organizations.

5. Financial illiteracy

Another major reason why many Nigerians fail to pay their loan is financial illiteracy. Many Nigerian aren’t responsible with money, they spend on things that are irrelevant.

Not just that, but a majority of them fall victim to scam. It is not new to hear of people taking loans to invest in Ponzi schemes. After losing money to these Ponzi schemes, they are unable to pay back the loan.

Additionally, some of them take loans and invest in sports betting as a way to make money. Now am not saying you can’t make money off it but most people lack discipline when it comes to betting.

Some lose thousand of naira daily on these bet platforms. They end up not being able to pay for their loss after burning all their funds in sports betting.

6. Entitlement

The final reason on this list today is entitlement. Many Nigerians feel that the money being disbursed by loan apps is meant for them in the first place.

They feel like these loan companies are owned by politicians and they feel this money is stolen money. This creates a form of entitlement as they feel it rightfully belongs to them.


Can you get arrested for not paying your loan?

No, you do not. Federal jurisdiction doesn’t permit loan companies to arrest defaulters.

Who is a loan defaulter?

A loan defaulter is one who neglects to pay for his or her loan.

What happens when you fail to pay your loan?

If you fail to pay your loan, your details will be given to the Credit Bureau of Nigeria. Afterwards, you will be unable to get any loan in the future.


Well, there you have it, a complete list of some of the reasons why Nigerians fail to pay back their loans.

I hope you found this article insightful, if you did, you should also see the top 10 loan apps in Nigeria.

Thanks for reading.

One thought on “Why Do Nigerians Fail To Pay Back Their Loan?

Leave a Reply

Your email address will not be published. Required fields are marked *