Microfinance organizations are important financial institutions that are popular over the world. For example, a personal loan Singapore is an easy way for people in need to get money before a salary. However, you have probably heard those stories where people try to get out of debt with bad loan from a microfinance institution for years. To avoid having such a situation, use these five tips to have the best microfinance institution experience:
- Make sure it has a license
The number one thing any person should do before getting involved with a microfinance institution is making sure it is legal. Each legal financial organization needs to have a license. Without it, there is no way you could protect your rights in case it is needed. Each country has different regulations in the financial sector, and we recommend checking it out.
- Read the reviews
Before committing to anything when it comes to personal microloans, we would suggest reading the reviews about the microfinance institution you chose. There is usually a rating of microfinance institutions for each country. It is based on popularity and customer reviews. Usually, respectable organizations take their reputation very seriously and have high rankings on the rating lists. You can also ask for advice from your family members or friends if they already had experience with such institutions. Their unbiased opinion can also be very helpful.
- Read the contract carefully
This rule works for each situation: never sign anything before reading it thoroughly. Many unscrupulous microfinance organizations include some paragraphs in the fine print. For example, the company states that your monthly percentage for the loan is 5 percent. However, they also include a paragraph stating that you need to pay the organization 10 percent for their services. That way, you need to pay 15 percent each month. A lot of elderly people who are trusting and not as careful get trapped.
- Make sure the monthly percentage is adequate
With each microfinance organization, you will have to pay a certain percentage for the loan you receive. Considering that microfinance institutions usually deal with people who need the money immediately and for a short period, the rate is usually high. That is why we recommend to check out several places and see what the are offering. You will be able to determine which organization has the lowest monthly rates and pay less at the end.
- Make sure you can pay on time
Although this tip will work for any microfinance organization, it is essential to consider. Before taking a personal loan, be certain that you will be able to pay it off on time. Each time you miss the deadline, the rate will grow. Some people have to pay twice the amount they received just to cover the percentage for missing the deadlines. You can get trapped in debt for months even with a small loan.
To conclude, getting a personal loan from a microfinance institution can be very helpful. However, before committing to anything, use the five tips on our list to choose the best organization for your personal preferences.