Suddenly, the car broke down, and ahead of the long-awaited trip on vacation. The TV failed, and the person just started watching his favorite series. Ahead of the celebration of the anniversary, and it becomes clear that the free budget can not meet. These are just some of the cases when you can not do without the services of microfinance organizations.
Advantages of MFIs
An application for a loan in the bank can be considered for a long time. And the requirements for borrowers imposed by these financial institutions may be impossible for many. Credit institutions are usually quite demanding on age, occupation, income and a package of documents of customers. And the funds, even if the loan is approved, not every bank will be able to issue in one day.
In microfinance organizations, the requirements for the clientare minimal, and he does not have to prove his solvency and seriousness of intentions. Even a document to obtain a loan requires only one. Most often it is only a passport. And the speed of receiving funds is incomparable with the bank. Many microfinance organizations make a positive decision, for example, when applying for a microloan on the company's website, in a matter of minutes.
Disadvantages of MFIs
One of the drawbacks is the ability to get only small amounts. Basically, MFIs issue loans of no more than 30 thousand rubles. If the client applies for a microloin for the first time – the amount will be even less – as a rule, no more than 10 thousand.
This is because microfinance institutions have an increased risk that the funds will not return to them, and thus they want to cover their future very likely costs.
The same reasons explain the second fact, for which MFIs are often criticized – high interest rates.
Opponents of MFIs often indicate the interest rate for the year, and often it turns out a "terrible" figure – at least 365 percent per annum. But this would be true if loans were issued for a year. As a rule, no one takes money in MFIs for such a period. Loans are taken for a period of several days to several months. And if a person decided to intercept to a salary, say, 2 thousand for three days, then at a rate of 1% per day it will cost him 60 rubles. Is that a lot?
Who is most often a client of microfinance organizations
These are people who:
- urgently need not too much money
- do not want to borrow money from colleagues and friends
- are confident in their ability to return the money in a short time.
Many may have the impression that MFIs give money to everyone. But that's not entirely true. Often the client is checked for solvency no less painstakingly than in the bank, and this is done through many channels of information. And if it suddenly turns out that the client has errors in his credit history, he may be denied a microloans. The advantage of an MFI compared to a bank is that the approach to the client here is less strict, and the probability of failure is lower.
These are people from completely different age and social strata. There are students, pensioners, unemployed, working and receiving good wages. Nevertheless, according to statistics, there are those categories of customers who apply for microloans more often than others.
The main clients of MFIs include:
- Youth
- Single and unmarried
- With a low level of education
- Unemployed or not officially employed
- Having a low level of earnings.
Nevertheless, MFIs offer their services to everyone. And since in the market, everything is always affected by the balance of supply and demand, this has an impact on the quality of services. High competition among microfinance organizations gives many advantages for customers. After all, few people want to lose permanent borrowers.
