4 ms·

I initially was a huge fan of Zidisha because of all the bullshit the microlending providers pull. Which is exactly like this. (fixed fees on small loans woul

• rdl 13y ago
  And, in fact, based on the Zidisha founder's response above, it looks to me like this was a mix of some legitimate issues (which will be addressed), some misunderstanding by the modern microlending analyst, and some in a gray area I'm not really sure about. I do really appreciate the quality of analysis Modern Microlending did here. It's also great that Zidisha responded within hours with a pretty full and honest accounting. This is how this kind of thing is supposed to work, I think.
  • unreal37 13y ago
    I agree. The original analysis made some important points, and the response by Zidisha was great too.
• netcan 13y ago
  In their defence, APR is problematic. It's misleading in itself. APR is enforced to keep lenders from disguising the real costs of a loan using fees and such. It's an ethical advertising standard. But, disguising the real costs of a loan is not the only reason to use fees. Fees are also used because the lenders' costs are not just borrowing costs. There's a flat cost to processing a loan. That translates to a flat fee which can raise APR to seemingly horrendous rates. Basically, loans don't scale linearly. Maybe micro-finance should come up with it's own standard practice. People need to make some allowances though. 25% is not terrible in every context.