According to the data in 2019, the average salary in Sri Lanka is 57,500 rupees that are equivalent to 315$. Nevertheless, such wages do not always provide people with enough money to afford comfortable living. To avoid constant borrowing from banks and relatives, today it is possible to apply for a micro credit that will contribute to both acquisition of urgent monetary aid and launching own business. If wondering how to receive this help, follow the next guide revealing the procedure, benefits, and rates. And, find out how to choose the best private lenders presented on the market.
What is Micro Credit?
This microfinance is a small loan usually issued for people who seek money to open a business. And, to become a self-employed social unit. Historically, this loan was presented to the market of countries where people are not acquainted with traditional banking systems. And, in some cases where there are no currency exchange operators. When applying to this service, a private lender will charge his interest rate and offer the repayment terms.
How to Get a Microcredit?
The requirements are simple but strict. First of all, any person should rationally estimate his paying capacity and income. The amount received from one lendor will depend on those factors. Besides, any applicant should be of full legal age. Most online services set their age limits that usually are from 18 to 55 years. And, to present the next documents:
- a valid ID;
- confirmation of employment;
- a few salary slips.
Some services ask an applicant for certification of finishing any skill development program. Or, they require them to have a minimum income of 30,000 rupees along with two guarantors. Then, a person should submit all the documentation required and finish the application form. The process of approval or denial takes a few days but in some cases, weeks depending on the amount enquired.
Micro finance always boasts various advantages that make people turn to it. The most common ones are customer support, fair interest rates, and receiving the money for any activities. For example, people may need money to pay for the outstanding bills, surgical treatments, wedding expenses, repairs of housings, and even for settling of existing loans. Then, it benefits with its repayment period. Some of the loans can be extended even up to 5 years if necessary. And in the case of failing to pay the amount on time, they can extend the terms. Moreover, it is a life-saving service for people who have a bad credit score. Lots of private lenders approve those applicants who have been recently rejected.
Micro Credit Loan Interest Rates
The interest rates depend on the lending services. For example, some companies offer rates ranging from 9% to 35% per year. Most importantly, as per the Central Bank of Sri Lanka, the rates should not exceed 35% per year, otherwise, such transactions will bear illegal character. And, this amount is inclusive of all the extra charges. The most reliable online services offer the applicant to use the calculator of fees and repayment days. Thus, a person will be deprived of unexpected expenses connected with applying for microcredits.
Micro Credit FAQs
Is it safe to turn to micro credits?
How to repay the loan?
The online services mention the list of their partners with whom applicants can repay the microcredit. To save the time of both the applicant and an organization, all the transactions can usually proceed through online banking.
Why the interest rates of microcredit are higher compared to other banking loans?
Microcredit rates are higher because the service representatives should regularly organize the meeting with applicants to confirm the solvency. Besides, after the credit is granted, such visits may continue to follow up the reimbursement status.