Almost all human activity requires money, and its function in society cannot be overemphasized. Over the years, the evolution of money has taken many forms. Sequel to the introduction of coins and notes, Nigeria practiced what was known as the barter trade system.
In recent times, the use of money can also be compared to its use in the ancient period. However, this report focuses on the issue of loans without collateral and further identifies top 6 banks that issue loans without collateral in Nigeria.
Due to the disparity that exists in the financial strength of individuals, the idea of borrowing or taking loan cannot be completely eliminated. People take loans for different purposes. Initially, collateral for loan purposes has always been an issue.
Recently, some financial institutions offer loans with no collateral attached; but the average human will ponder if there really exists any financial institution that is ready to offer a loan without collateral and actually what kind of loan it will be.
Conditions in which a bank issues a loan without collateral
In order to encourage the workforce that exists in the bank, profit making is considered a vital part of the financial institution. To achieve this, the bank does not just issue loans without collateral.
It takes a look at the creditworthiness of the individual customer in order to approve such a loan. In clear terms, the following criteria are considered for loan without collateral: the debt-to-income ratio, the credit score, credit history and of course, the financial profile of the loanee
What measure does the bank take if the borrower defaults?
Since this involves a loan without collateral, the bank is usually considered to experience higher risk. However, if the loanee defaults, the bank may decide to involve a third party or go to the extent of taking legal actions. Also, if the borrower defaults, this results in indebtedness and there, affects his creditworthiness.
Does loan without collateral apply to all kinds of loans?
Loans given without an asset given as security does not apply to all kinds of loan since it is usually associated with higher risk. Some selected examples of such loans include the credit card loan, student loan and the personal loan.
And the bigger question: “Do banks really give out loans without collateral?”
An individual is not discriminated against from loans given without an asset given as security if he fulfills the generally approved conditions. Hence, with the kind of loan in question and the general conditions, an individual is protected by law to acquire a loan without collateral
A look at the top 6 banks that issue loans without collateral in Nigeria
Guaranty Trust (GT) Bank
Loans given without collateral issued by GTBank are offered via a platform known as Quick Credit. The Quick Credit platform has a loan limit of about N5 million with a flexible repayment plan. In order to make this loan easily accessible, there’s no letters or reports required and excessive documentation.
First City Monument Bank (FCMB)
Being a long existing bank, it issues various kinds of special loans without an asset given as security. The list of Loans given without an asset given as security that exist on FCMB platform include the Auto Loan, Salary Top-Up Loan, Fastcash Loan and The Premium Salary Loan. These highlighted loans are easily accessible by the USSD code *329# provided specially by the bank.
Access Bank
Access Bank issues loans without collateral via a special software application known as Quick Bucks. This application grants the loanee the freedom of chosing between various loan options and better select that which suits him.
First Bank
FirstCredit is a product of First Bank which is designed to issue loans without collateral and no documentation. Unsecured loan limit for a First Bank account holder depends on the account activities of the individual.
Stanbic IBTC
For the purpose of meeting the immediate financial needs of its customers, Stanbic IBTC issues personal loans and SME loans with no collateral and limited documentation respectively.
WEMA Bank
WEMA Bank issues personal loans to its current and previous employees or to individuals with pre-approved relationships with the bank.
It is important to note that unsecured loans may vary from bank to bank depending on certain individual circumstances.
After a careful analysis, a borrower may ask whether it is really worth borrowing without collateral or just borrowing from friends and families. Either getting a loan without collateral or borrowing from family and friends constitute a form of indebtedness.
Although borrowing from family and friends comes with almost no interest rate, trusting an individual to pay back is on its own considered a risk which may lead to a higher risk. However, an individual who borrows from family and friends is considered to be on a safer side since such a transaction does not appear on his credit report.
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