Credit is available from a wide range of sources for example banks, credit card companies, vehicle finance companies, credit providers, clothing and department stores, pharmacies and even family members. Most people lend money with one thing in mind – to make money.
This can be done through charging you interest and administrative charges, like banks, or by encouraging you to spend more money with them, like clothing stores. In all cases, the credit facilities that you have
will cost you money. How much it will cost you, depends on the type of loan.
Informal lenders (chimbadzo) are thriving because, for some people, it is the only way to borrow money. Often, because the interest rates are so high, the only way to repay an informal lender is to take out another loan. Soon a cruel cycle spirals out of control. Some informal lenders employ debt collectors who use unorthodox measures to collect their money. Make sure you only borrow from registered credit providers.
This kind of credit is easily available as stores are always looking for ways to increase their sales. The more you buy, the more credit they make available to you, often without you even asking for it. These accounts work like credit cards but allow you only to use the credit in their own store for various purchases.
Most people only repay the minimum amount due each month, causing high-interest rate charges. Look for any hidden costs that also earn interest if not paid on time, such as admin fees, club membership, and
insurance policies. Make sure you are not paying for something you don’t want.
Themba has a solution. He says that Sophie is lucky that she only has one store card that will soon be paid off but the right thing to do if she had more accounts would be to choose one store card that is her favourite and close all the others (or at least destroy the cards and pay off the remaining debt).
List the store and credit cards you have. Do you need all of them? Which ones do you use?
Choose the loan installment that will suit you. Choose the period that you want to pay it back in. Minimum of ZWL4 000. We are flexible so that you can borrow what you can afford.
Monthly repayments include a compulsory ZWL12.00 admin fee and ZWL6.20 protection cover.
All loans are subject to credit approval. The table is quoted at September 2014 and is subject to change.
Rates quoted are a guide and could vary, depending on your personal circumstances.
| Amounts Z$ | Monthly Installments Over Two Years Z$ | Monthly Installment Over Three Years Z$ | Monthly Installment Over Five Years Z$ |
|---|---|---|---|
| 4000 | 285 | 223 | 173 |
| 6000 | 403 | 318 | 244 |
| 8000 | 539 | 413 | 316 |
| 10000 | 667 | 510 | 387 |
| 12000 | 574 | 580 | 435 |
| 14000 | 798 | 676 | 503 |
| 20000 | 1270 | 954 | 705 |
| 25000 | 1580 | 1272 | 873 |
How much does a loan actually cost you? Let’s look at a ZWL4 000 loan:
Total repayment over 2 years = ZWL285 per month x 24 months = ZWL6840
Total repayment over 3 years = ZWL223 per month x 36 months = ZWL8028
Total repayment over 5 years = ZWL173 per month x 60 months = ZWL10380
Total interest over 2 years = ZWL2 840 Total interest over 3 years = ZWL4 028
Total interest over 5 years = ZWL6 380
Let’s look at a ZWL10 000 loan
Total repayment over 2 years = ZWL667 per month x 24 months = ZWL16008
Total repayment over 3 years = ZWL510 per month x 36 months = ZWL18360
Total repayment over 5 years = ZWL387 per month x 60 months = ZWL23220
Total interest over 2 years = ZWL6 008
Total interest over 3 years = ZWL8 360
Total interest over 5 years = ZWL13 220
What do you notice?
When you calculate the total interest can you see how much a lender charge?
It is better to repay loans over a shorter period. Although the monthly repayments are cheaper for a longer period, the total amount paid increases because of the interest they charge.
The company doesn’t actually specify the interest rate. If they told you the interest rate was 25% to 30% per year you might be put off. They are hoping that you won’t do the calculations above. The small print says that your actual rates could be different, depending on your circumstances.
The rates are subject to change. You could suddenly find yourself with higher monthly repayments if interest rates increase.
There are extra costs of the protection cover of ZWL6.20 and an admin fee of ZWL12.00 per month. These might not sound a lot but over five years they amount to over ZWL1 000.