What is meant by refinancing microcredits of MFIs
Refinancing of microloans of MFIs is a rather complicated procedure. The main difficulties are associated with poor solvency and low credit rating of borrowers. Microloans of MFIs are issued, as a rule, without any customer checks.
For this reason, banks and other financial institutions do not take microfinance organizations seriously about borrowers. They a priori consider them insolvent and unreliable and rarely give the opportunity to refinance at a lower interest. But in some cases, borrowers succeed.
When is the best time to apply for refinancing of a microloan MFI
The easiest way to get a new loan to pay for the old one in the MFI at an early stage. That is, when the borrower has a relatively good credit history and pays his debts. If the client has no delinquencies (even though he took new microloans to cover the already formed debt), he is considered a good client for the bank, and therefore the credit institution can offer him a choice of several financial products.
In this case, the bank, of course, will not offer the most profitable loan (you need to understand that the clients of the microfinance organization are initially under the close attention of the security service and are considered potentially problematic), but these conditions will be much better than those offered in the MFI.
Plus, the bank will be able to give its client insurance, which will be an additional plus. If an accident happens to the borrower, which will reduce his ability to work, the insurance company will cover the debt.
Is it possible to refinance a microloan in an MFI in case of delays
If a person has already made a delay and spoiled his credit history,then it will be somewhat more difficult to communicate with banks. In this case, the number of possible offers from banks is significantly reduced, and therefore the borrower will have to agree to any conditions for refinancing the microloan.
If the delay is already large, you can refinance at a lower interest rate in the same MCC or contact another microfinance organization. Some MFIs agree to refinance microloans issued by other credit companies.
