BEFORE YOU TAKE THAT LOAN!


(8 essentials things you need to know before taking a loan from a "money lender"


In Nigeria, prior to 1990, money lending was regulated concurrently by the Federal Government of Nigeria and by the various State Governments through the Moneylenders Act, 1958 and the Moneylenders Laws of various States. However, the Moneylenders Act has been repealed, leaving the regulation of money lending to the Moneylenders Laws of various States in Nigeria. Their provisions are basically the same. The Moneylenders Law of Cross River State, shall be our reference point. Unless otherwise indicated, all sections of the Moneylenders Law cited shall be from the said Law, (though in this post, no sections of the Law shall be cited)


1. WHO IS A MONEY LENDER?


A money lender is any person who lends a sum of money in consideration of a larger sum being repaid. Such a person MUST be licensed.


2. WITHOUT BEING LICENSED, CAN ONE LEND MONEY ON INTEREST?


A person, though not licensed, can lend money on interest. They are however regulated by the Moneylenders Law. "Any person other than a moneylender who gives out loan on interest is liable to comply with the law as to the requirement relating to interest chargeable".


3. WHEN IS IT ILLEGAL TO LEND MONEY ON INTEREST WITHOUT BEING LICENSED?


When one makes money lending one's regular business. One is allowed to be involved in a single or occasional transaction of money lending. However, one must be bound by the provisions of the Law relating to interest charging.


4. MUST EVERY MONEY LENDING CONTRACT BE IN WRITING?


Yes, such contracts must be set down in writing, signed by the parties to the contract or their respective agents before the money is lent or security given otherwise such contract shall not be enforceable by a moneylender against a borrower. However, the absence of writing will not, ipso facto, render the contract void. Thus, where a moneylender has otherwise enforced an oral money lender contract, the borrower cannot seek to set aside the contract simply on the grounds that it was not in writing.


5. HOW MUCH INTEREST MUST BE CHARGED ON LOANS?


The interest which may be charged on loans, whether by a money lender or by a person other than a moneylender shall not exceed the respective rates specified hereunder:

(a) on loans secured by a charge on any freehold property or Government bonds or insurance policy or the debentures or shares of any company or by a bill of sale in respect of any goods..., simple interest at the rate of 15% per annum for the first one thousand naira or part thereof and at the rate of 12 and 1/2% per annum on any amount in excess of one thousand naira;

(b) on loans secured by a second charge on any of the real or personal property..., simple interest at the rate of 17 and 1/2% per annum on any amount in excess of one thousand naira;

(c) on unsecured loans, simple interest at the rate of 48% per annum.


6. CAN A LENDER CHARGE MORE INTEREST THAN ALLOWED IN LAW?


Not only is the charging of unauthorized interest an offence, the moneylenders contract is illegal and unenforceable.


7. CAN A LENDER INCREASE INTEREST RATE BY REASON OF DEFAULT IN PAYMENT OF SUMS DUE UNDER ANY MONEY LENDING CONTRACT?


Such is prohibited.


8. WHEN WILL IT BE LATE FOR A LENDER TO SUE TO RECOVER MONEY LENT OR ANY INTEREST IN RESPECT OF A LOAN?


After the expiration of 12 months. After 12 months, the lender loses his right to sue.

-source: https://m.facebook.com/451481005025583/photos/a.451950901645260.1073741827.451481005025583/457940134379670/?type=1&source=46&refid=17

Nice piece...

How can one get the lincence?

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