It would be awesome if your "What are the fees and interest?" section on your borrower page was this explicit and clear about what the fees and interest rates are.
That's the page. Something like "No fee to apply. You chose 5-30% interest rate. $12 registration fee applied to first successful loan."
A calculator like Shipwire uses to help people calculate the cost of their fulfillment services: http://www.shipwire.com/pricing would be ideal, but you'll run into very old browsers in those internet cafes. So even a more demonstrative infographic would help borrowers see just what's being offered.
I really hope you guys succeed, I've just worked with people who could use what you're offering and have seen them disappointed too many times by offers that were either misleading or that they just didn't understand.
This is the text we currently display in that page:
You can propose any interest rate between 5% and 30%. The first 5% goes to Zidisha to cover money transfer fees, and anything above that goes to lenders. Lenders who find the proposed interest rate reasonable can choose to fund the loan at or below your proposed interest rate.
In addition, new applicants who succeed in raising a loan pay a one-time registration fee, which is deducted at the time the first loan is disbursed.
View current registration fees
"View current registration fees" displays a modal box with the registration fees applied in local currency in each borrower's country. (These are currently about $12 in Kenya and Burkina Faso, and zero in the other countries in which Zidisha operates.)
Our loan application form does provide a cost calculator to borrowers, though it does not use the term APR. The loan application form works as follows:
1. The applicant specifies the amount he/she would like to borrow, and the combined interest and fee rate he/she would like to offer.
2. The applicant specifies the local currency amount he/she prefer to pay each week or month. (Our website advises selecting the largest installment amount one can comfortably pay in order to minimize interest cost.)
3. The applicant chooses the day of the week or month he/she would like to make payments.
4. Based on this, our site generates a display of the local currency principal and fee/interest amounts that will be due, along with a projected repayment schedule.
5. The applicant can go back and modify the proposed loan parameters until he/she is satisfied with the cost and repayment schedule displayed, and can then publish the loan application on our website.
6. Lenders can fund the loan at rates between zero and the applicant's offered rates. In practice, many lenders opt to fund loans at low or zero interest, such that most applicants receive the loans at lower interest than what they had proposed.
I just went to page for lenders to donate / lend 50$ to a guy in Kenya. First you say this:
> You can propose any interest rate between 5% and 30%. The first 5% goes to Zidisha to cover money transfer fees, and anything above that goes to lenders.
but then, on the next page you say that I need to pay 1.75$ for money transfer fees. What is the problem there? Why do I have to pay this fee multiple times? Will I also be charged that fee again when people start paying off?
Look, the idea of microfinancing is nice, but the way you play with the numbers in order for them to "look better" is just to scammy. In the end of the day, I just can't trust you anymore that the money really goes where you says it goes if you can't come up with the clear upfront cost breakout without playing games. If you are not playing games, but simply not understand how this looks like, then please just shut down and stop poisoning the good idea with atrocious presentations.
I understand applying a fee for money transfers to both lenders and borrowers looks misleading when compared side by side in this way.
These are two separate costs. The fee for lenders offsets the cost of receiving their funds via PayPal or credit card. It is set to match as closely as possible the average transfer fees that our organization pays to PayPal and Stripe.
The 5% charged to borrowers covers international money transfer costs, and the cost we pay to local payment services in each borrower country. This fee is also set to match the average money transfer cost we pay across all countries.
We use two separate fees because it allows us to ensure that we receive income at roughly the same time costs are incurred. This helps ensure we always have enough cash flow to cover our costs, no matter how quickly the organization grows.
