Forum > Lender Questions > Add a limit to loan repayment time
I recently made a loan to a borrower requesting a repayment period of several months (I don't remember exactly what the length was). Now, when I look at the loans status, the repayment time is 648 months with repayment complete in 2071 or 54 years. This is a ridiculous loan duration. Even when I bought a house my repayment schedule was only 30 years and that period was agreed upon up front. I am all for flexibility in working with borrowers who are struggling to make their way with their business, but changing loan duration should have some limits.
Hi Richard, based on Dave's previous information, a bug in the old system that allows members to change installments to the lowest minimum so that the duration of the loan becomes very long and now a new policy has been imposed that the loan duration should not be more than 5 years, but it seems does not applied for all members, the duration of the loan is very long not only disappoints you as a lender but also very unfair to other borrowers because the new loan becomes difficult to be funded.
I strongly agree with you that the duration of the loan up to tens of years is irrational, they take advantage of the feature of changing the installment amount by choosing the smallest amount after 1 or 2 installments and after getting the high loan limit, even when apply a loan they choose the duration rational but easily can be changed after the loan is disbursed although not all of them having difficulty in his business.
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Hi Richard, what you have pointed out what has been happening and it appears borrowers are abusing the option of loan adjustment. It does not make economic sense to delay a loan of about $500 to 10 or 20 years, otherwise, it would only be logical to mean that the project the borrower is engaged in is either not economically viable or he is just not serious.
However, there is a sigh of relief as this has been taken care of by management and now, I believe the longest period of loan repayment is about 5 years.
In future going forward, the Zidisha management should take the delays in reducing the On-Time Repayments percentage as a means of curbing this trend.
I also wish to thank-you Richard for being with us borrowers, I personally have benefitted a lot from your generous funding of my loans and I do not take it for granted.
The maximum length of a loan was fairly recently changed to 5 years. Do you have a link there for the borrower's loan you're referring to and then our Technical Team can look into it?
Hi dave, 5 years maximum duration's policy seems applied only to new loans or new borrowers after this policy is enforced, because I see there are still many loans with dozens or even tens of years duration especially big loans (3 or 4 digits loan amount) but choose the installment amount very small (an average of about $ 0.7- $ 3) so that the duration becomes very long, maybe you can check to the technical team for the process of adjusting the amount of installments for every members.
Date Disbursed: Aug 22, 2017
Expected Completion in 2063
Date Disbursed: Oct 8, 2017
Expected Completion in 2030
A loan of $640.97 was made to Margaret Watene on August 4, 2017.
I hope this link takes you to the loan in question.
Hi Richard, I have just seen this profile too. I would suggest that her Volunteer mentor to kindly advise her on loan viability. It is not practical to say that she will still be doing the same business 54 years from now!!!
Many thanks for the info, Mimin, Joost and Richard.
I've reported all 3 of those to our Technical Team and I'll let you know when I've heard back.
54 years to repay 640dollars,even the percentage does not make any economic sense.
Richard, I think you may be getting things wrong for such instances. Increase in the period does not all the time mean the whole loan will be fully paid in that long period. In certain weeks when a borrower can't afford the weekly amount payable he has the chance to reduce the weekly payment which automatically increases the repayment period. Subsequently, he comes back to restore it and the period reduces.
I reduced my loan repayment of GHS 97 to GHS 10 a week along the payment period and the total period jumped from 2017 to 2020. However, I later increased the repayment amount to GHS 150, and GHS629. I just finished payment and has posted a new loan pending funding. I did same in my first loan.
If a borrower really needs money to run his business, he will never delay the payment period especially when there may be bonus for early settlement. Also especially when there are higher loan amount ahead he can apply for.
Adam, I think you are in the minority. There was discussion awhile back of maintaining the ability to reduce payments WITHOUT extending the loan term. That makes more sense. Frankly, I'm unlikely to loan to someone with a 5-year term, yet I see borrowers who initially promised to pay in months then stretching it to years.
Sometimes things don't appear as it shown.adjusting a repayment amount to a smaller amount will expand the loan period but doesn't mean we will continually be paying in that bit.all I know is that it ease the pressure on you. who really mean business will always make sure they have a good repayment records.i don't even adjust the installment amount before I make a large amount of repayment.because of this flexibility in repayment it makes zidisha loan a better option for some of us as entrepreneurs.keep been generous, your toil will not be in vain.
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