Read and compare a loan offer
Read and compare a loan offer
A small instalment does not tell you the full cost. Compare written offers using the same amount, purpose and repayment period.
Check what you will receive
Record the stated principal, each deduction and the net amount paid to you or a supplier. Ask whether a fee is deducted, paid separately or added to the loan. Check any compulsory insurance or third-party charge. A calculator that omits a required charge will understate your cost.
Name the interest method and period
Ask whether interest applies to the original principal throughout the term or to a reducing outstanding balance. Also ask whether the quoted rate is monthly or annual. A flat rate and a reducing-balance rate with the same number are not equivalent. An interest rate alone is not an APR or a complete cost comparison.
Read the schedule and obligations
Check every payment date, the first payment, any larger final payment and the total repayable. Ask about late charges, early settlement, security, guarantees and collection procedures. For a group loan, understand whether another member’s missed payment can create an obligation for you. Request an explanation in language you understand.
Compare with a simple cost record
Illustration only: a MWK 200,000 principal with a MWK 10,000 deducted fee gives MWK 190,000 in net proceeds. If scheduled repayments total MWK 240,000, the cash cost above net proceeds is MWK 50,000. Add any separate mandatory payments that the schedule excludes. Keep copies of the offer and the final agreement; do not sign with unanswered questions.
Put it into practice
Create five lines for each offer: net proceeds, payment dates, scheduled total, separate fees, and security or guarantees. Ask the lender to resolve every blank.
Take the next step with clarity
Lending is subject to eligibility, assessment and agreed terms. An enquiry is not a loan approval.