Microfinance companies offer small finance packages to various borrowers. They help people with bad credit, poor credit history and non-home owners in getting finance at a very low rate of interest.
Microfinance companies as the name implies, are small financial companies that offer small loans to marginalised groups, where there is less money need as compared to the other segments of the society. These groups normally do not have regular access to normal financial institutions like banks and other lending institutions.
The first criterion for applying for the loan is the borrower must have a good credit history. The loan amount depends upon various factors such as the income and the financial capabilities of the borrower. Microfinance organizations usually prefer a co-signer in case the borrower has no assets to pledge as collateral.
The terms and conditions of the loan amount are negotiated in accordance with the income of both the borrower and the co-signer. The lender offers competitive rates and a quick processing of the loan. In some cases, the loan amount is paid back in a single monthly instalment. But this depends on the availability of cash in the borrower’s account and the repayment capacity of the borrower.
There is a facility called Pay Day Loan, which can be availed by people in dire need of cash. It is not the conventional type of loan and is provided to the borrower only during his financial instability and if he is unable to return the loaned amount on the agreed time. People with bad credit history or those who have CCJs and IVAs are not eligible for this loan. However, these borrowers can get money through the IVA process, if their financial situations are not as bad as what was previously mentioned.
Most of these loans are short term in nature and repayments may be done in installments. So, it is advised to keep an eye on the repayment capabilities of the borrower.
Another important feature of microfinance loans is that they are easy to apply for, as the borrower can avail them even without a credit check. Moreover, the lending institutions are very cautious about the credit rating of the borrower before offering him a loan.
The lending institutions to ensure that the borrower is not a defaulter and is able to repay back the loaned amount without delay. The lending institutions also check whether the borrower can sustain the repayment capacity of the loaned amount or not.
There are various sources for finding out more information regarding microfinance loans and the loan process. One can also research on the internet and search for microfinance lenders. These lenders can be contacted through online forums, websites, telephonic calls and mails. The Internet is also a great place to find details on micro finance.