Three reasons why you should avoid IZWE loans like the plague

Getting the loan from Izwe Savings and Loans

My first interaction with Izwe Loans was in December 2020 when I needed a loan to supplement my cash to buy a motorbike. I had received a text message from one of those people who send text messages about loans with fake interest rates. I’ll confess that at this point, I was naïve above the designs of these guys, so I fell for the deception. Upon further inquiry, I was told that their office was in Tamale. Since I was going to buy the motorbike from Tamale, I decided to take out the loan in Tamale. I got there only to be led to Izwe Savings and Loans office as the issuer of the loan. When I inquired about the vast difference between the rate in the text message and the actual rate, I was told that the difference was down to administrative fees, which I rejected categorically. However, I decided to go ahead and take out the loan from Izwe since I was pressed for time and there were no better options in sight (looking back, a bank loan would have been far far far better). Because of the number of clients and internet problems that day, it took me a while, but by the close of work on January 3, 2021, I had got the loan. The process took about 6 to 7 hours. I was thankful to Izwe for helping me solve my problem, though at a very high cost.

If everything went well, what has prompted me to write this piece with this nasty title: Three reasons why you should avoid Izwe loans like the plague?

Reasons why you should avoid Izwe loans like the plague

There’s actually one overarching reason, namely, they care more about making money than they care about helping and satisfying their customers, but I’ll break it down into three reasons.

1. They make it difficult to settle your loan early

This is the reason that prompted me to write this piece. Before I took out the loan, I inquired about the possibility of early settlement (because that was what I intended doing), and was told it was possible. I took out a 36-month loan, and 25 months down the line, I was ready to settle. I contacted Izwe Loans for a settlement quotation. I was hoping that it was going to be a simple process, for example, they would just generate a quotation, like how one generates a mandate, and email it to me so that I would go to the bank and pay. Surprisingly, I was told I had to go to Tamale (I live in Wa) to request the settlement quotation and then wait for 3 working days to get it. What?! Three working days to get something that shouldn’t take more than 5 minutes to generate electronically?! Even if the settlement quotation would be generated manually, I wouldn’t expect it to take more than 30 minutes!

Why do I find this bureaucratic procedure funny?

1. Calculating the settlement should be something very easy to do using a simple formula. The formula should look something like this:
   
   Settlement = Outstanding monthly principal repayment + Penalty
   
   Where
   
   Outstanding monthly principal repayment = Monthly principal repaymmment*Remaining months
   
   and
   
   Penalty = % Penalty/100*Penalty factor
   
   Note that all terms and formulae are my own inventions, but they should closely depict how the settlement is calculated.
   
   If something as simple as this is going to take 3 working days to do, there’s no doubt in my mind that there’s something fishy about it.

2. It was much faster getting the loan.
   It took me only 6 to 7 hours to get the loan, where a lot of paper work had to be done. How on earth does it take 3 days just to generate a settlement quotation when they already have all the information they need? One can even apply for a loan online, how come one cannot request and receive a settlement quotation online?
3. Are they at risk if they generate the settlement quotation and email it to me to pay?
   None I can find. All the risk is mine, because I would be the one giving them money, not the other way around
4. Do they stand to gain with this bureaucratic process?
   Absolutely, yes. If I’m able to pay off the loan, they’ll lose some of the interest I would have paid to them. However, if this bureaucratic process frustrates me into giving up, they gain that interest

The above revelations show that Izwe loans makes the process of taking out loans relatively fast to quickly rope in people, however, they deliberately stall the process if you want to settle your loan early, in order to frustrate you into giving up, so that they can maximize their profits. This is a shady business practice, since they make you believe that you can settle your loan early, but turn around to stall the process.

Finally, they sent me the settlement quotation by email only after I had sent them an excerpt of this article which I threatened to publish.

Then came the next hurdle. Upon reading the settlement quotation, I found some conditions difficult to understand, believe or accept, so I sent them a reply with complaints and questions. Below is the content of my message:

Thanks for the quotation.

There are two points I need clarified.

1. Under the table, you have this note: “You are required to furnish the Lender with written notice of your intention to settle the loan facility earlier than the agreed repayment term as per the provisions of your loan agreement. In the event that you fail to furnish the Lender with the required notice period of your intention to settle the loan facility earlier than the agreed repayment term the Lender reserves the right to charge you interest in lieu of such notice period.”

Are you asking me to furnish you with a notice of “intention” after you’ve already responded to my “intention”? It is weird that this statement is included in the settlement quotation. I would have expected you to demand that notice before issuing the settlement quotation. If I’m to give you this notice of intention, how do I get it to you: by mail, email or in person (as it seems to be your constant requirement)?

Kindly explain “charge you interest in lieu of such notice period” in “In the event that you fail to furnish the Lender with the required notice period of your intention to settle the loan facility earlier than the agreed repayment term the Lender reserves the right to charge you interest in lieu of such notice period.” I don’t understand why we should be talking about interest because of notice if I pay the settlement and give you evidence.

2. Point 3 of the “Important Information” section reads, “You are further required to present this settlement quotation together with the cash deposit slip and your original identity document to any of the Lender’s branches in person on or before the abovementioned early settlement date.”

The whole point of asking for the settlement quotation electronically was to avoid having to travel to Tamale (I live in Wa in the Upper West Region and you don’t have an office here) in order to settle the loan. Can I not just send the cash deposit slip and scans of my ID to you electronically (I don’t even need to give you the settlement quotation since you issued it to me and you have it), e.g. through email like this? You already have a copy of my ID in your database, so you can compare with what I send you.

With those two conditions, I think you’re still putting unnecessary barriers in my way to comfortably settling the loan. You guys want me to waste money and time to do something that can easily be done in an alternative way without any cost to you.

What harm can come to your business if the whole process is handled remotely? After all, I’m giving you money, not taking money from you? Shouldn’t I be the one to be weary of remote transactions?

To date they have not replied to my email. This is one of the triggers to my eventual decision to publish this article, about 2 years after paying off the loan.

Since in the settlement quotation, I was told to go in person to Tamale with the settlement quotation and the payment slip, I eventually let the loan run its full course, as they desired, and they got their full interest. Going to Tamale wouldn’t be worth it. You can talk about transportation, feeding and accommodation, together with travelling risks. Even if I saved something, it would be negligible.

2. High interest rates

To begin with, their interest rates are extremely high compared to loans from the traditional banks. For a loan of nine thousand Ghana cedis (GHC 9000), I was paying five hundred and seventeen Ghana cedis (GHC 517) monthly for 36 months. I later consulted my bank and realized that if I had taken the same amount from them, I would be paying about half of that!

3. Use of middlemen to falsify interest rates to deceive potential customers

I received the messages with loan offers from multiple people. I followed the lead of a few of them and all of them led me to IZWE loans. They would take me directly to one of the workers at the IZWE office. This shows that the workers there were aware of these “agents”. One of the officers claimed that they had asked the “agents” to stop sending those messages but they persisted. If they knew the “agents” were sending out false information to lure unsuspecting people to their business, why didn’t they vet the messages they sent out and cease working with those who persisted in sending the false messages? This is easy to do. I saw his claim as merely an excuse.

Note: I put “agents” in quotes because I can’t confirm if it is an official term.

My Advice to the public

1. Based on my experience, I would not recommend you take a loan from Izwe Savings and Loans. Even if you have a serious emergency that requires you to raise the loan instantly, I would advice you to try a different loans company. I have gone through the experience; you don’t also have to go through it.
2. Always consult your bank before looking else, it appears the interest rates at the banks are generally much lower than those of loans companies. It might surprise you that your bank will be able to get you the loan as fast as the loans company. You can never tell until you try.
3. Disregard messages with loan offers offering extremely low interest rates; those are just not real.
4. If you want to explore those messages, always ask for the name of the loans company. With that information, call the loans company directly and ask about their interest rate. From the above experience, they usually refuse (or are unable) to give you the (full) interest rate. They rather give you the monthly deduction. This, however, is enough to take a decision on.

Disclaimer

I cannot confirm if IZWE Loans still engages in these prices, nor have I checked their current interest rates, or how good or bad their services are now. It’s up to you to do your due diligence.