The use of loans through digital platforms is expected to increase significantly in the coming weeks before the holiday season, according to a new survey.
The baptized survey Digital loans: changing seasonal trends, by Jijenge Credit says that despite tough economic times in 2019, December and January could prove to be the months when big spenders turn to online borrowing.
“Over the next few weeks, we expect an increase in the number of loan applications and the demand for such fast loans will continue to increase until the first quarter of 2020,” said Peter Macharia, banker and managing director of the lender. digital Jijenge. Credit.
The lender proposes that the industry watchdog consider stricter regulation in digital lending.
The study report calls for increased scrutiny of credit checks on borrowers to prove they can afford a loan to prevent people with bad credit from falling into arrears.
Mr Macharia said one of the most popular loans that borrowers are increasingly absorbing is the logbook loan, sometimes reaching up to 50% of a car’s value.
Borrowers risk taking out the loan to pay their children’s school fees and finance vacations.
“Digital lending is fast and efficient and requires less paperwork. The turnaround time is short and as a result you are likely to see an increase in logbook loans, ”Macharia said.
“That is why some regulation of the authorities is necessary.”
Credit checks are not thoroughly performed prior to disbursement of funds.
“The borrower background checks are also not thorough, as they are with banks. Loans to vehicle owners should be particularly targeted, ”he added.
The lack of credit checks has led to a growing number of borrowers racking up negative ratings and others losing vehicles.