MCI Logo
[:ro]Ce trebuie să știi când vrei să împrumuți?[:]

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.