What do you need to know when you want to borrow?

To take or not to take a loan is no longer the biggest dilemma today. People rack their brains on how to get funding and not to allow the family budget to fall under the burden of debt.

Early in the morning, on an unusually warm November day, when not all of the townspeople came to work yet, there was a great hustle in the showroom of the Tandem furniture factory in Chisinau. In the hall arranged in the style of a cozy apartment, a group of employees thoroughly examined the graphics projected on the screen. They have the task to choose the most favorable option among the loans proposed by the lending expert. Participants in this exercise quickly made calculations, some in mind, others on the sheet. Veronica, the Sales Manager, proposed the best solution, close to the correct option. She initially rejected the option with the lowest interest rate, because she knew that that was by no means an indicator of the cheapest loan. She has been through such an experience before, taking a mortgage. Before concluding the contract, he studied the subject for a month, thus being prepared for negotiations with the bank.

“I took a very rational approach, I have kept myself informed, I calculated the total cost of the loan. I had a mortgage, – said the young woman, – so I took all the costs into account, and then I checked again. And it took me another month to get the money.”

“Customers with such preparation can be counted on fingers,” – recognizes Alexandru Golomoz, Senior Lending Expert at Microinvest, the institution that carries out the Borrow Wisely national campaign. It was initiated by the International Microfinance Centre, which comprises more than a hundred financial institutions. In Moldova, Microinvest has taken on the role of familiarizing the population with the safest options of contracting a loan. For a month, experts from Microinvest, including Alexandru, organized information workshops all over the country, shared brochures to all customers and distributed educational videos on social networks.

“From my own experience I can say that very few people understand what is the difference between the calculation of the interest from the loan balance and the calculation from the principal amount, but this is a big trap for beginners: they look at the interest rate, the commission, however, do not take into account or have no idea, for example, about the origination fee. The client needs MDL 10,000, but in fact, he will receive only MDL 9,700. This 3% represents that origination fee, which people don’t ask about, but there are and other fees. Practically, everybody asks how much they will have to pay monthly, but they miss the details”, – says Alexandru.

Not without reason, it is said that the devil is in the detail. And if we talk about these monthly installments, then here is a ruse that one needs to be aware of. We believe, naively, that we shall have no problem with the loan repayment if the monthly rate is equal to the money that is left in our pocket after deducting all monthly expenses, but it’s not like that. During the training, the furniture factory employees learned from Microinvest experts the true formula for the safe loan repayment.

If the salary is MDL 10,000 and the expenses are MDL 8,000, then you still have MDL 2,000. This amount, however, cannot be accepted as a monthly loan repayment rate. Out of the amount of MDL 2,000 you have to subtract 30%. MDL 1,400 is the ceiling of the amount you can afford to pay monthly. This is because you have to keep the money for unforeseen expenses. You don’t have to take the shirt off your back – that is the advice of the experts, that care about the customer, who on a sudden can be involved in a difficult situation. For Microinvest, this belief represents a corporate philosophy.

“We adopt the position of the responsible creditor, – says Adriana Rasmirita, marketing specialist at Microinvest, – We place emphasis on transparent information and rely on informed customers. They are our partners, they should feel comfortable cooperating with us. Our task is to build long-term relationships.”

Sitting on an elegant sofa in the showroom, sales consultants attentively listened to the speeches of financial experts. This information will be of great use in a situation when, for example, one of the potential customers will want to buy a sofa, but won’t be able to pay the full amount at once. It’s the consultant who is expected to be a link between the buyer and the lending institution and the first one who must answer the customer’s questions.

“I’ve noticed that people who more often buy the furniture on credit, are interested whether it is possible to extend the repayment term of the loan, and see the difference between buying on credit and the loans which include the repayment in installments, without interest,” –confirmed Veronica.

Microinvest staff explains: the potential borrower and its guarantor should get all the necessary information. In this case, the most important thing is to remain vigilant. There is also a customer support service at Microinvest – at phone number 022 801 701. Consultants can answer any question related to lending. Here are a few tips: on no account whatever, don’t take loans for other people; pay attention to even seemingly most insignificant terms of the loan; read the contract from cover to cover; calculate everything down to the last penny; and if something unexpected happens, and you can’t pay a monthly rate, don’t conceal this, contact the experts of the company from which you took the loan, so that they can assist you in finding a solution.

Microinvest provides training for employees of various enterprises as part its activities within the Borrow Wise campaign. Besides the Tandem factory, this year Microinvest staff also visited the JCI Moldova organization in the north of the country, where it shared useful information with local entrepreneurs. This campaign is conducted annually with the support of the International Microfinance Centre in 16 countries of the world. Only last year, more than 300,000 people were acquainted with the safest ways to get a loan. Microinvest is the only company that supported this initiative in Moldova.

Client's Name
Client's Surname
Personal Identity Number
Currency
Term
Rate
Amount
Monthly payment
Amount to receive
Purpose
Comments

1. Name and Contact Information of the Creditor
Creditor
Address
Phone number
Email Address
Web page

3. Costs of the credit
Rates related to the credit
Annual Percentage Rate of Charge (APR) This is the total cost expressed as an annual percentage of the total amount of credit. The APR is there to help you compare different offers	%
In order to obtain the loan in accordance with the agreed terms and conditions, it is mandatory to conclude an insurance contract to guarantee the loan or a contract for another ancillary service.
Related costs
Any other costs deriving from the credit agreement	Fee for services rendered in relation to usage of credit, calculated and paid as follows: of the credit and paid by the Debtor on the date of granting the credit from own sources or is deducted by the Creditor from the amount of the credit The negotiation / prolongation of the credit can take place by mutual agreement of the parties, by signing an additional agreement, the Creditor being entitled to request an increase in the interest rate within the limits provided by the legislation in force. In case of negotiation / prolongation of the loan, the Borrower shall pay to the Creditor, at the date of the negotiation / prolongation a commission in the amount of 2% from the credit balance at the time of negotiation / prolongation.
Conditions under which the costs related to the credit agreement can be changed	The Sides can change the costs related to the credit by written agreement signed by both parties; For the non-constitution of the guarantees within the agreed term, the Creditor is entitled to calculate, and the Client will pay to the Creditor an Interest of delay in the amount of 5% annually, applied to of the daily balance for each day of delay, starting with the date following the term established for the constitution of the guarantee/ s and until the date of the proper execution of the respective obligation.
Obligation to pay for notarial fees / mortgage registration fees / fees for noting the prohibition of pledge in the Transport Register related to the pledge of means of transport (agricultural machinery)	Paid by the Client , except as otherwise provided in the pledge / mortgage agreement.
The cost for the valuation of real estate proposed in pledge	Paid by the Client directly to the Evaluator
Costs in the case of late payments Missing payments could have severe consequences for you (e.g. forced sale) and make obtaining credit more difficult
The repayment of the loan is free of charge in the secondary offices of the Creditor, as well as at the discretion of the Debtor through the representatives authorized to collect loan payments. The list of which and their fees are published on the website of the Creditor (www.microinvest.md/cum-achiti-creditul/). In case the Debtor use payment methods with fee, the Debtor cover all the costs of repayment of the loan and undertake to make the payments in such a way that the Creditor receives the agreed repayment amount and without any deductions by third parties processing the refund payment.
In accordance with and arising from the provisions of art. 15, para. 7), lit. a) from Law no. 202/2013, any payments related to the granted credit (commissions, taxes, penalties, late interest and any other type of payment), except interest, will be applied and collected within the limit of the ceiling of 0.04% of the total value of the credit per credit day multiplied by the number of days of actual use of the credit (hereinafter 'Ceiling'). Therefore, the Lender will be entitled to apply and collect the costs, excluding interest, exactly in the fixed or percentage amount established in the contract if the said ceiling allows, and if the ceiling is lower than the value of at least one cost, excluding interest, then the Lender will be entitled to reduce the fixed/percentage amount and apply and collect any of the applicable costs only within the limit of the ceiling value. When calculating the ceiling, the costs already applied and collected will be taken into account, with the exception of interest, which reduces its value. (Representative example: if the amount of the penalty is 20 MDL per day, and the ceiling value at that time is 16 MDL, then a maximum of 16 MDL will be collected).

4. Other important legal aspects
Right of withdrawal You have the right to withdraw from the credit agreement within a period of 14 calendar days	Yes
Early repayment You have the right to repay the credit early at any time in full or partially	Yes
The creditor is entitled to compensation in the case of early repayment The Debtor may repay the loan in full or in part in advance, notifying the Creditor in writing 3 days in advance, and paying an early repayment fee of:	% from early repaid amount, if the period of time between the date of early repayment and convened maturity exceeds one year; % from early repaid amount.The early repayment can be made only if the Debtor has no outstanding debts on interest or other amounts to be paid in accordance with the Contract. % from early repaid amount, if the period of time between the date of early repayment and convened maturity does not exceed one year.
Database usage The creditor must inform you immediately and without charge of the result of a consultation of a database, if a credit application is rejected on the basis of such a consultation. This does not apply if the provision of such information is prohibited by law or is contrary to objectives of public policy or public security The parties may agree on additional terms and conditions, which will be included in the credit agreement.	Yes
Right to a draft credit agreement You have the right, upon request, to obtain a copy of the draft credit agreement free of charge. This provision does not apply if the creditor, at the time of the request, is unwilling to proceed to the conclusion of the credit agreement with you	Yes
The period of time during which the creditor is bound by the pre-contractual obligations	This offer is valid for 15 calendar days after it is issued.
In this regard, I subsequently declare that: I was provided with the necessary information, the essential characteristics of the above-mentioned credit product were explained (interest rate, number of commissions, credit costs, early repayment conditions, total amount to be paid), as well as the consequences of non-compliance with contractual clauses; the costs included in the total cost of the loan were explained to me, including the costs for ancillary services related to the credit agreement; I was offered the possibility to negotiate individually the contractual clauses in the credit agreement that I intend to sign, I negotiated individually the granting commission, the monthly commission, the amount of penalties and I mention that its clauses do not disadvantage me, being fair in the report mine with the creditor; I was asked by the creditor about the probable importance of the information provided and whether essential circumstances that I expected to be provided were not omitted in order to make an informed and rational decision about concluding the potential credit agreement. the information provided and the corresponding explanations allowed me to assess, including the personal analysis of other offers of third party creditors, whether the proposed credit agreement is tailored to my needs and financial situation; I know the content of the contract and all its conditions have been explained to me, I have understood and accepted them, and the documents and information underlying the conclusion of the contract are complete and accurate; I know the law, the normative acts that will govern the contract, as well as the lack of consumer quality; I have no ambiguities or misunderstandings regarding the terms of the contract; the credit product corresponds to the purpose described above and will be used according to the destination and the economic activity carried out. The assets procured/resulted/constructed/repaired from received loan sources will be registered/transmitted in the social capital of the company where my business activity is carried out and/or will be used jointly by the members or individually however strictly for running my business activity. (Signature)