Model Repayment Schedule
The provision of comprehensive, consistent and easy to understand repayment schedules are an area where most financial institutions can improve the transparency of their pricing.
The MFTransparency Model Repayment Schedule has been designed to help providers of microfinance standardize their loan documentation, ensuring it is comprehensive and clear to the client. It is available both in PDF format, and as a usable excel tool, forming a sheet in the Calculating Transparent Prices Tool.
Loan documentation should always be considered from the point of view of the client, and the repayment schedule should show all expected payments from the client, including:
- Annual Percentage Rate (APR)
- Total Cost of the Loan (TCC)
- Fees and commissions paid – all fee names, amounts, dates, including taxes and insurance
- Installment information – repayment frequency, total number of installments, installment amount divided into principle and interest, with totals.
- Dates – of loan disbursement and loan repayments
- Existence of other loan features – Grace Period, security deposit (compulsory savings), penalties etc
- Contact details – of both the financial institution and the client
In addition to disclosing pricing terms through loan documentation, it can be equally important to communicate pricing to clients verbally. This is especially true for borrowers who are have a low level of literacy. In such cases pricing information should be communicated in the language best understood by the borrower.