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What Happens To Tala Loan Defaulters?

The Tala Loans agency has solidified its reputation in the Kenyan mobile loans market due to its swiftness and reliability in offering financial assistance to applicants looking for quick and simple loans.

The application has embraced the advancement of mobile money transfer to give financial loans to many people, including those who seek to launch or grow their businesses.

You can receive a loan of Ksh 500 to 50,000 in a short period by downloading the app from the Google play store or the Apple app store and following an easy application process.

Definition of Mobile Loan Default

When you apply for a loan from Tala, they usually provide the applicant with a clearly defined ‘Terms and Conditions’ statement to inform you that you will be entering into a legal agreement.

As soon as you agree to those terms and click ‘Accept,’ you have promised to repay the debt after the stipulated period.

Failure to repay on the specified time or avoiding settling the debt entirely means you are a mobile loan defaulter.

What Happens When You Fail To Settle Your Tala Loan

Although there are plenty of reasons why some people fail to pay the loans they have taken, some being genuine, it does not change the fact that Tala will still consider them defaulters. 

The Terms and Conditions clearly state the consequences one should expect from Tala if you fail to comply.

Since you have to agree to qualify and receive the amount requested, it gives the lender the power to take the following actions:

1. Reduce Your Credit Rating Score

This move resulted from the current government regime’s intervention, where President Dr. William Ruto decided to abolish the previous system.

The system allowed mobile money lenders to submit the details of their defaulters to the Credit Regulatory Bureau (C.R.B) to be blacklisted, which meant that they would no longer qualify to access any other type of credit services.

However, under the current credit score system, once you fail to pay your mobile debt (including Tala loans), your overall credit score is lowered instead of being blacklisted.

With a poor credit score, you will no longer be eligible for higher loan amounts.

Learn more here: Can Tala List You On CRB?

2. Debt Collection Agencies

Another strategy Tala uses to recover their money once it’s clear that you have defaulted is outsourcing debt collector services.

The debt collector agent usually notifies you that Tala has contracted them to follow up on your loan.

They also warn you that failing to repay the loan, the agency will track you, confiscate your assets, and auction them to recover the debt owed.

3. Increased Interest Rates

Although everyone knows that Tala charges a specific interest for their loans since that is how they make their money, it is essential to note that they will also charge you an additional one-time interest of 8% on the total amount owed. 

This interest acts as a penalty for defaulting, meaning you will have to pay a much higher amount than the one you were required to settle initially.

Compared to other mobile money lenders that impose a daily late payment penalty, Tala is very lenient.

Also Read: Does Tala Call Your Contacts?

Kenyalogue Contributor

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