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Veraz Advocates

what you need to know about lending/ borrowing money in Nigeria


Borrowing or lending of money forms part of our everyday activities. We can lend or borrow money from friends, families, neighbors, customers, business partners/ associates, colleagues or even classmates, organizations, financial institutions etc.

Most of the time when lending or borrowing the money, because of our relationship with the person involved, we tend to throw caution into the wind and neglect to do the needful. Whenever the person wanting to lend money from us is a family member or a friend, we so much attach emotion that our sense of thinking or reasoning will be beclouded by our emotions.

From my experience as a lawyer and debt recovery agent, I have seen that 90% of debt cases come from family members, friends and colleagues. Because the creditors are always moved by emotions they fail to take these important steps (precautions) I am about to reveal.

Before you lend or borrow your hard earned money to anyone there are some important steps (precautions) you need to take so that you can fall back on them when the person defaults to pay.

These steps (precautions) are as follows (not in any order of priority)


READ: Debt Collection or Recovery Services In Nigeria


  1. DO NOT LEND OR BORROW MONEY WITHOUT ANY WRITTEN AND SIGNED AGREEMENT. There must be an agreement signed by both parties and if possible it will be witnessed by at least one person. Oral agreement can be denied at any time especially if there is no witness that was there when you people agreed on the debt. If there is no written agreement it will be the case of your word against your debtor which is very hard to prove in court.


No matter your relationship with the person asking for the money  DO NOT give out your money without him signing a document for you, even if the debtor say “just next week, I will pay. No need of signing an agreement”. Please insist! There is no harm in signing and he kept by his word and pay back the next week.


You do not need to consult a lawyer to prepare an agreement, just a simple sentence with the details of both parties names, address, date the money was/will be given, date of payment, mode of payment (whether installment or in full) reason for the debt, signature of both parties and witness signature.

Please be wise!



In this era of money transfer, it is always easy and convenient for us to sit at the comfort of our home to send money to people. After you have signed an agreement, if the person asking for the money gives his account details try and verify the account. Check if the account is active and has been in use. Please try as much as possible not to transfer the “debt money” into another person’s account other than the debtor’s account. It will save you a whole lot of headache later!

Prevention is better than cure!


As you transfer the money, please keep every details of the transfer incase the debtor defaults in paying back.



If you are not very conversant with the debtor, please find out his or her address and phone number(s) and make sure you verify them before parting with your money. Let us not be too familiar with friends and colleagues that we fail to know or verify their addresses before lending out the money. There are some family members we only know the state where they are residing but don’t know their actual address. They can call us on the phone to lend them some money to pay back later. Caution my brother! Please let us take these necessary steps (precaution) as listed. MONEY IS HARD TO COMEBY THESE DAYS!



Depending on the amount of the debt, if it is a huge sum the agreement should be drafted in a way that even if the debtor dies his successors in title will pay the debt. This is where the services of a lawyer is required. The lawyers know how to draft the agreement so that death of the debtor will not be a barrier to the repayment of the debt.


Many people have lost fortunes because of this avoidable mistake. Where you did not couch the debt agreement to rope the debtor’s successors in title to be liable to the debt, once the debtor dies that will be the end of the debt!


Have you not wondered about bank loan? Even where the debtor is late the children continues to pay the debt until the last kobo is paid. It is because of the papers the debtor signed.

Think about it!



This is dependent on the amount involved. If it is a huge sum of money, let the debtor bring a reasonable and well-meaning guarantor.  If the debtor disappears with the money/debt, you can always hold the guarantor responsible. The guarantor must be somebody who is capable of paying back. If the guarantor is not capable, your guess is as good as mine.


In a case where the guarantor have a landed property or a property which have same value as the debt sum the debtor should hand it over to you before you lend out you money. In the case of a landed property, the title document should be brought and the creditor must verify same.


If the debt is small, there will not be any need for a guarantor or collateral.



IN CONCLUSION, all these steps must be taken or adhered to before you part with your money and not after you have given out the money. If it is after, you will find it very difficult to get the debtor to do all these. You make the debtor do all these when he is desperate for the money, once he has gotten the money it is hard. It is always good to hit the iron when it is hot.


Thank you for reading.  For comments or questions. Call: 08035492685. Whatsapp only: 09054440156.