Kiva loans at 0% interest

in enterprise •  7 years ago 

Up till now, in reviewing Kiva I have focused on loans with field partners.

They do have an experimental model that they are currently operating in the US. These are direct loans without a field partner and consequently the interest rate is 0%.

Kiva does leave us with this warning.

Their mitigation for these risks does take on the following aspects which I will comment on in this post:

Kiva internal vetting is done first.

This is done to confirm suitability, risk levels etc. and eliminate ineligible borrowers .

Social underwriting

This may involve interviews with family and other community members to asses their character and develop depth to the individuals overall story.

This assessment is especially effective in groups with with strong community ethics and values.

Use of Trustees

These are often those that know the borrower and will encourage them to repay their loan. There is a reputational aspect to trustees that they can build up over time.

A private fundraising period.

If persons from the borrowers own social network is not prepared to contribute to the cause and put "skin in the game" then it is less likely that they will be a good borrower.

and ongoing monitoring

Kiva commits to follow up and assist in helping borrowers to meat their loan obligations.

My thoughts

Many of these measures are best or at least functional practices from other lending scenarios found all over the world.

What interests me most about this model is the 0% lending rate and the fact that some good practices are being implemented to mitigate risk.

These are the types of practices I think all microlenders should be striving towards.

Image is a screengrab from kiva.com

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I loaned out a lot of money on Kiva. A few thousand. I did not get back a good chunk of my money. Be careful.

Never invest more than you can afford to lose !

Kiva loans are never intended to be an investment, the lender gets no interest and runs risks, the key is never lend what you are not prepared to give away.

I'm not familiar with Kiva. What incentive does Kiva have in providing 0% loans? Is it a non-profit?

correct

Microfinance is an amazing new tool for development across the world and especially in the global south. Hopefully we can make it more sustainable by avoiding usury and using best practices like those at the Poverty Action Lab.

will have to check it out

nice post

This post received a 1.5% upvote from @randowhale thanks to @arobert! For more information, click here!

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Great Initiative of Kiva is, giving loan without interest.

I never really understood the idea behind Kiva. The loans don't pay interest, so you just lend out the same money over and over until someone walks off with it. That doesn't seem sustainable.

It another way of donating

These are the types of practices I think all microlenders should be striving towards.

That's interesting, you are doing a great job. This will bring smiles on all borrowers face with a 0% interest.

who would ever fall for 0% loan interest doe really

Its for do-gooders not investors

this is greet, but i think the lender banks get a very high mortgage to secure there loan

Thanks for information

You are the hero I want to be like you and I would be grateful if you supported me

Great info :)

thx for this information :)

Great work likee it and upvoted!!