Digital mobile loans are the most popular forms of credit for majority of Kenyans owing to their ease of loan disbursement
Furthermore, it is the most viable option for the unemployed and those who lack the accessibility of bank accounts required by conventional credit institutions before loan advancements.
However, on the flip-side, digital mobile loans have contributed to over 2.7 million Kenyans being blacklisted by CRB for loan default with majority claiming unfavorable loan terms offered by the micro-lenders.
This therefore begs the question, what makes a micro-lender reliable?
Below, we look at some of the opinions shared by a section of borrowers regarding the subject.
( Please note that there is an opinion poll at the end of this article, please fill and submit )
Availability of Ussd codes
Ussd codes are pre-configured services that allow a simplified interaction between a service provider, network operator and the consumer.
Such codes are alternatives to loan apps which require installation to smartphones before loan applications can be made.
App platform diversification
This entails the accessibility of loan apps through a wide range of operating systems such as android, iOS,windows,Symbian,java etc
Longer repayment duration
Loans advanced to borrowers should offer flexible repayment terms of more than the standard 30 days.
Higher loan amount limits
This helps reduce the uptake of loans from several lenders in-order to achieve a considerable loan amount that may deem beneficial to a situation.
Network carrier diversification
Since all micro-lenders require an active mobile money service for eligibility, they should avail their services across ALL network operators.
Effective communication channels.
This consists of active contact channels whereby issues raised by borrowers are resolved in a timely manner.
Use of M-PESA API integration
This simplifies repayment procedures whereby borrowers do NOT have to cram Paybill Numbers and due loan amounts.
This involves a simple action of clicking on a ‘Repay’ tab and the M-PESA STK pops up with all the repayment details thus requiring one to input only M-PESA PIN so as to finalize the transaction.
Reasonable interest rates
Interest rates charged on loan advancements should be reasonable in the sense that they should NOT take up anything closer to half of the principal amount.
Availability of referral bonuses
Referral bonuses are a way of rewarding users who ‘recruit’ new users for the service provider.
This can be an excellent way of passively repaying active loans using the earned bonuses.
Respect to borrowers’ privacy
One of the major perks of taking mobile loans is the individual privacy of no one getting to know of your financial crisis.
However, this can prove embarrassing when random calls are made to phone contacts informing them of your outstanding loan upon default.
Availability of repayment date extension
We live in an unpredictable world and as such, there are instances whereby loan obligations are not met due to unforeseen circumstances.
Therefore, ALL lenders should have a provision of extending repayment durations on favorable agreements between them and the borrower.
Availability of grace period
Upon lapse of the repayment duration, lenders should provide a grace period within which borrowers can be able to make late repayments without any late penalty fees being charged.
Leniency on CRB checks
Loan approvals should be based on an individual’s repayment history with a specific lender.
It should not be generalized that if a borrower is in CRB, they will automatically default on all future loans.
Lack of registration fees
The essence of payment of registration fees before loans disbursements beats the whole logic of loan applications.
Generally, the whole process of applying for a loan is because borrowers are looking for funds. Therefore, asking for fees before loan approvals is illogical.
Lack of pre-approval interest deductions
Interest rates are what keeps micro-lenders operational besides investor funding which is primarily based on return on investment.
However, deduction of interest prior to loan disbursement can present a perception of ‘greed’ and also inconvenience borrowers who are in need of the actual amount of funds requested for.
Availability of a physical address
Since most digital mobile loans do not require the necessity of physical presence during loan applications, majority of micro-lenders do not see the need for ‘brick-and-mortar’ locations.
However, having a physical location whereby borrowers can access in case of any inquiries or find solutions to problems encountered with the lender’s services, boosts a lender’s image in terms of credibility and reliability.
Is there any that was left out, please write it down at the comments sections so we can add it to the list.
Meanwhile, please fill out the opinion poll below.