Three Important Things To Know Before Taking on Microfinancing

Regardless of your income and possible bank troubles, microfinance lenders help you get financing you need on a small scale as long as they trust you. Trust is a crucial factor in making a microfinancing transaction successful, but there are important things you have to know first.

1.     You Need to Be Employed and of Good Conduct

Microfinancers are established companies. They can increase your interest rates the more you fail to pay your dues, but they also know you could just run away from your debts, leaving them with no profit. During an interview, they will ask you about your employment, your salary, collateral and your conduct regarding your work and in the local community.

2.    Different Requirements for Different Microfinancers

Microfinancers each have different requirements to ensure transparency and security in the financing they will provide. Some microfinancers may ask you to pay a small downpayment. Others may require that you have a background check with the local security bureau. They may also ask you to surrender your ATM to them until the debt is paid off.

3.    High Interest Rates

As you are a high-risk client, you will be given a high interest rate with your financing. If you fail to pay your monthly dues, your rates will greatly increase. While this will not affect your actual credit score, microfinancers have networks in the area and in other different areas, which makes your record troublesome should you need another financing in the future.