A recent comprehensive report by Metropol Corporation CEO Sam Omukoko indicated that so far, more than 380,000 Kenyans have defaulted on loans taken from mobile lending platforms.
When you borrow money from these mobile lenders, you usually enter an agreement on a payment plan with a time limit.
You have every intention to pay back that money you borrowed when the cash was tight but sometimes people fall back on the payment due to one reason or another.
But have you ever wondered what happens next when someone defaults on a loan he or she borrowed? Read on to find out.
1. Additional charges
If you default the first month, the majority of these loaners such as Branch and Tala usually add an extra charge on interest, making your loan grow bigger.
In the long run, you will end up paying extra hundreds or thousands depending on what you borrowed
2. Your credit score will drop
Let's say you were eligible to borrow an amount of Sh10,000. After months of defaulting, that amount will drop to an amount lower than that and probably not be able to borrow at all if you continue defaulting.
3. CRB blacklist
The lender may also decide to report you to the Credit Referencing Board (CRB), who will then blacklist you and bar you from borrowing money from any money lending platform, between a period of not less than five years and not exceeding seven years, after which debt that you owe will be considered as having expired.
You can, however, decide to repay the loan and have your name removed from the blacklist.