Microfinance organizations (MFI) in recent years have become increasingly popular among population. The faster popularity of this service grows, the more myths and rumors about it appear. This is especially true in relation to online loans because this service is relatively new. This violates the idea of granting microloans to population. Suggestions arise because of financial facilities performance ignorance, and fear of something new and unknown. It is necessary to sort through this conglomeration of rumors and determine whether to allow them exist or not.
Myth 1. Microfinancing is Carried Out by Fringe Organizations
Many people think that MFI is always criminal, fringe organizations pursuing one goal – to deceive and confuse client, using unfair methods and violating law. This is not true. Today, microfinance facilities, including, those specializing in granting loans online are functioning within legal framework and go through registration process at Central Bank (https://www.centralbank.net/). These data are listed in the State microfinance organizations register, which is based on the law «Concerning Microfinance Activities and Microfinance Organizations». Such companies activity is built so that all conditions for getting speedy loans have no access restrictions, and borrower is informed in advance about interest rates, overpayments amount and others. If a person decided to use getting money online service, he can learn all the information in detail via the website in the comfort of his home.
Hence, MFI is a legal company with its own capital, license, carrying out its activity in a particular competitive environment, as well as any other sphere. And its task is not to «rob people blind» but to provide financial services to population, in order to increase their quality of life, as well as region economic level development.
Myth 2. All Microfinance Organizations «Wheedle» Money Out of Debtors Through the Use of Force
Respectable MFIs never use brute force dealing with debtors, working within legislation that contributes to more efficient methods use. Some financial institutions, working in the field of lending money and loans online, have debt collection departments, operating exclusively within Civil Code. Those institutions where there are no such departments, are employ debt collection agencies to work with debtors.
Myth 3. Only Broken and Irresponsible People take Microloans
Myth 4. Money are Granted to Everyone and his Dog.
It is believed that mostly marginal people and swindlers, that are not going to repay money, take microloans. The main part of borrowers is disciplined people who need to operatively solve financial problems. Statistics show that typical borrower is a man with stable average, or slightly below average, income, family, working in public sector or at small enterprise (76-80%). Basically, speedy loans are taken for housing needs for home renovation (36%), personal expenses (9-10%), health, household appliances purchase, car repair, family events (8%). Often men (55%) apply for such services, but generally loans approved to women (60%). Men are leading in the number of overdue debts.
Get to know news relating to Microcredits:
Organizations working with loans online implemented a special scoring system that applies special technique, and able to process bulk information and data to check client’s paying capacity and reliability.
These suggestions appear because of ignorance or difficulties people confront. So, before you take a loan in microfinance organization, it is necessary to examine financial products on the market, and decide which one suits your situation. For those who have this knowledge, myths about microloans will not become real.
It should be noted that microfinance market is still forming, dishonest and unfair participants are still present in it. In order not to come across such facilities, people must be able to orient among these companies and understand that he is the only one responsible for his choice. Gradually dishonest companies will be out of the market, replaced by structures operating within law.