What it is
A small loan, usually $50 to $500, for an emergency or working capital, repaid over a few weeks to a few months. Interest is quoted as a percentage per month, which makes it hard to compare. The real cost is the total in dollars you repay.
Who it suits
Irregular earners, market vendors, drivers, people with no credit history yet. Licensed microfinance institutions are capped by the National Bank at 1.5% a month interest.
What it usually costs
You borrow $200 for 3 months at 1.5% a month on the original amount, plus a $3 admin fee. Interest is $9, plus $3 is $12. You repay $212, or $70.67 a month.
See what it costsWhen not to use it
- If you are salaried. Wage access or a salary advance is cheaper.
- If the lender is not licensed. The rate cap only applies to licensed lenders.
- If you are borrowing to repay another loan. Come and talk to us first.
Questions to ask
- 1.Are you licensed by the National Bank? What is the licence number?
- 2.What is the total I repay in dollars, including every fee?
- 3.Is interest charged on the original amount or on what is left?
- 4.Is there any fee that is not in the contract?