Most people take loans without understanding how they work and how they make money and if they are able to repay those loans given the technicalities associated with the loans.

It's also very common to see people who don't read the fine print before accepting to take a loan especially when it comes to instant loans.

This has landed so many people especially Nigerians in trouble simply because they are septa the contract without really understanding how it works or if they are able to fulfill the terms and conditions of such contracts.

Well there are a lot of people blaming loan companies for the means they have used to recover loans, most loaners default not because they wish to, but soon find out that they didn't understand the terms of their contract


In this post, I'm going to explain some common terms you should look out for when attempting to take a loan and how to calculate your repayment plan.

What is a loan

A loan is money given with the knowledge and agreement that it would be repayed in most cases the lender adds an interest, to be repayed with the original amount know as principal. According to investopedia, loans come in many different forms including secured, unsecured, commercial, and personal loans.

Basically when someone borrows you money to be repaid at a later date, with or without Interest, it's termed a loan. It's shouldn't be confused with a grant, which is money given for a specific purpose in mind and most times is not paid back.


Interest rate

Interest is Simply the cost of borrowing money. Put another way, it's the amount the lender gets for giving out his or her money. Interest rate tells you how high the cost of borrowing money is and is a percentage of the money being borrowed.

The higher the interest rate, the higher the amount that has to be paid for borrowing the money. It's important that when taking loans you should understand the interest rate as it would determine how much you should pay back to cover the loan.



Annual Percentage Rate

In simple terms, annual Percentage Rate is the yearly interest a loan attracts. While loans can have different interest rate depending on the lender and can have fixed interest, independent of time, others have compounding interest rates that increase with time.

However the annual percentage rate doesn't compound the interest and it's a fixed interest to be paid on the loan after a year.

For example if you borrow ₦10,000 from PalmcCredit at an APR of 12%, at the end of the year, you're expected to pay ₦11,200, principal of ₦10,000 and an interest of ₦1,200.


Credit score

Another important term to understand before taking a loan is your credit score. It's based on your past loan history and according to Equifax, it is usually a determinant in the type of loan and terms a creditor or lender is willing to offer you.

Basically a credit score calculates and rates your willingness and ability to repay a loan within a given time frame. That said, the more you take loans and repay them early, the higher your credit score and the reverse is the case when you don't make payments on time or default on your loans.

The higher your credit score, the better you look to lender and the more readily you can get loans and of higher amounts.

This is why when you try to get a loan from PalmCredit for the first time you'll discover there is a limit you can be given which is calculated using many metrics including your your bank account history.


How instant loans work

Instant loan apps like PalmCredit provide near instant loans without collateral or paperwork loanees by accessing their bank records and other personal records such as contacts to ascertain the validity of the information the loanee provides as well as use these information to calculate the maximum amount the loanee can access at that particular time.

After verifying the validity of the information, the loan amount is either approved or declined or an alternative amount is presented. The better your credit score, the better you're able to access a loan from PalmCredit.

There for you should ensure you repay your loans on time to enable you get higher credits.

It's also important that before taking a loan, you read the terms of agreement, as accepting without reading them indemnify you to them. Reading and understanding them also helps keeps you safe from fraudulent activities of scammers as you know better about loans.

Now that you've gotten some useful information about loans, if you need a loan for your business or some personal issues, PalmCredit got you. Check out our amazing interest rates and APR.

To get a loan of up to ₦100,000, Simply follow these 3 steps.

1. Download the PalmCredit app
2. Fill in all your correct details and choose a loan amount you desire
3. Get approved & credited in less than 5 minutes