Borrowers Can Bargain for Cheaper Loans-Bnr

Category: Personal Loans
Published: Monday, 13 October 2014
Written by Admin

The numbers are clear: commercial banks are adequately capitalised, the key Repo (the rate at which banks borrow from the central bank) is low at 6.5 percent, non-performing loans are declining and return on assets is good for the entire banking sector.

So why are the interest rates on loans still prohibitive?

The Sunday Times put this question to the Governor of the Central Bank, John Rwangombwa, and though he disagreed that credit rates are prohibitive, he agrees that interest rates are not yet in-tandem with the National Bank of Rwanda (BNRs) current Repo rate.

Banks are charging clients interest rates of up to 19.5 per cent on small personal loans ranging between Rwf1.5m and Rwf6m; and it appears most borrowers have no option but to take what is on offer.

I agree with you that interest on credit of up to 19 per cent is high for personal loans but we encourage customers to push banks a little, for lower rates, said Rwangombwa.

In other words, Rwangombwa suggest that loan seekers can negotiate with credit officers for lower interest rates but in most banks, thats not an option available to individual borrowers.

Franccedil;oise Kagoyire, the Director Bank Supervision at BNR says that while it is true interest rates are high; customers have accepted the rates as credit to the private sector keeps growing every month. According to Kagoyire, it is therefore difficult to advocate for people who are not complaining.

The governors voice on high rates is lonesome, customers should join his efforts by refusing the high interests by shopping around for cheaper loans on the market, Kagoyire opined.

But is this possible?

Appetite for loans picks up again, say major banks

Category: Personal Loans
Published: Sunday, 12 October 2014
Written by Admin

The amount of new borrowing through personal loans has outstripped repayments every month this year, figures from UK banks have indicated.

Such a consistent rise in this type of borrowing has not been seen since 2007, the British Bankers Association (BBA) said.

However, the reverse is true for overdrafts, with more money repaid than taken out for much of the year.

The figures also showed a moderation in housing market activity in August.

DIY spending

The monthly data from the BBA shows that there was £175m in net borrowing in personal loans in August and £346m in net borrowing through credit cards.

I was particularly struck that after years of decline, demand for unsecured personal loans is rising quite strongly again, said David Dooks, statistics director at the BBA.

Those products are often used to finance bigger purchases such as cars or major home improvements - the sort of spending we often put off until we feel confident about our financial circumstances.

When customers feel more optimistic about the economic outlook they are much more likely to take on new borrowing.

However, overdraft repayments outstripped new borrowing by £286m in August.

Personal loans hit by credit reports

Category: Personal Loans
Published: Saturday, 11 October 2014
Written by Admin

Avia Collinder, Business Reporter

The Bank of Jamaica in its most recent Credit Conditions Survey suggests that borrowers are facing a new head wind with information flowing from the operations of the nascent credit bureau system.

The two credit bureaus that went live in 2013 have indicated that they have the capacity to serve a market generating 400,000 new loans per year.

The BOJ said in its report that lenders have reported tighter credit conditions for the June quarter, due to increased instances of late repayments and a stronger need for loan monitoring.

Additionally, some borrowers in the personal loan market were adversely affected by reports from the credit bureaus, the report said, adding that lenders also indicated a worsening of credit conditions for the September quarter.

On the plus side for consumers, lending rates fell from 20.69 per cent on average in March to 19.25 per cent in June and is projected to fall further to 18.86 per cent in September.

Lenders overall are placing closer attention to risk in Jamaicas slow economy, a process facilitated by the credit history, reports and scores generated by the new bureaus.


They are now receiving full information on the current credit exposures of their clients whereas, before credit reports, they would only know what the applicant chose to tell them, said Megan Deane, CEO of Creditinfo Jamaica Limited.

They will also now know whether current obligations are being handled according to the agreement or not. As such, with receipt of full information, their risk assessment may determine that an applicant should not be taking on more debt.

Deane said that if report indicates a previous default or current un-serviced obligation, typically, the loan is first automatically declined by the lender and then the applicant has to seek managerial review of the decision.

It depends on the credit rules and decision criteria of the particular institution. Decision rules vary, depending on the appetite for risk, she said.

Deane said she would not be able to provide the percentage of requested reports that fall into the negative or iffy category because the bureau does not see the reports being pulled. That information would have to come from the lenders pulling the reports.

Retail banking managers canvassed were largely unwilling to share specific information on the impact of credit reports on their loan approval process.

Credit checks were always part of the CIBC FirstCaribbean International Banks credit application process and we have not seen any increase in declines recently, as a result of reports from credit bureaus now being available, said the CIBC FirstCaribbean Jamaica office.

JMMB Merchant Bank said that while it has welcomed the inclusion of credit reports, in supporting our adjudication processes ... we are not at liberty to discuss the number of applications we receive, or statistics surrounding our approval of those applications. We consider that kind of information to be highly confidential.

None of the top three banks - National Commercial Bank, Scotiabank and Sagicor - responded to Sunday Business queries.

Deane says the comprehensive profile created by credit reports examines many aspects of borrower behaviour.

Credit scores are mathematical calculations that track the payment pattern of the consumer - Do they always pay on time? Are they late or partial payers? It is also influenced by how much debt the subject has compared to their available credit limits, for example, on credit cards, number and type of credit exposures and myriad of other parameters including demographics, said the credit bureau manager.

It is a highly specialised field, she said.


Deane adds, however, that she doubts any institution is being guided solely by a borrowers credit score, saying the lenders are more likely to be tracking the predictability of Credinfos scores against actual performance of the loan.

At this stage, I would expect they are more being guided by the comprehensive information we are providing and then determining if the individual applicant can actually take on more debt, she said.

The information used to develop credit reports and scores generated by the credit bureaus - the other player is CRIF NM Credit Assure - is pulled from seven years of borrowing history and credit consumption.

In August, the Credit Reporting Act was amended to also allow the credit bureaus to pull data from utilities, telecommunications providers and other billing companies, to assist in the generation of credit profiles.

Deane, a year ago, had lobbied for such companies to be designated credit information providers, saying while some Jamaicans might not have a credit history, they are often the owners of one or even two mobile phones and that the consumption of airtime and call credit could be used to analyse and predict credit behaviour.

Deane said then that research by the IFC, an arm of the World Bank, showed that how people pay their water bills is a very good indicator of how they will handle credit.

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Hebrew Free Loan Association to mark 110 years Nov. 15

Category: Personal Loans
Published: Saturday, 11 October 2014
Written by Admin

Since 1904, the Hebrew Free Loan Association of Cleveland has provided more than 25,000 interest-free loans to individuals and families in Northeast Ohio. The organization will celebrate its success with a special Party110 celebration on Nov. 15 at Temple Emanu El in Orange. 

The organization was initially founded to help immigrants and entrepreneurs who wanted to start their own business but did not have the financial means to do so. The first loans were small business loans given to immigrants to help them purchase horses and pushcarts in order for them to sell their wares to make a living. 

 "If you go to the Torah, the highest form of tzedakah is not giving someone a gift of money, it's giving someone the ability to help themselves," said David Edelman, president of HFLA. "Giving someone an interest-free loan is considered one of the highest forms of charity."

The organization has evolved over the years. In addition to small business loans, HFLA now distributes interest-free education loans and personal loans, which can cover anything from dental expenses to an emergency car repair.

HFLA lends money interest free to responsible individuals who can demonstrate a genuine need, has been unable to obtain a loan from a conventional source, will be able to repay the loan in monthly installments and has one or more suitable co-signers.

Russian immigrant Zoya Avshalumov has seen firsthand how HFLA's loans make a difference. Her daughter Lana received an interest-free education loan in 2009 to help pay for tuition at the University of Pittsburgh. Her son, Pinkhas, received a similar loan in 2010 to attend The Ohio State University. 

"The loans made a great impact," said Zoya, who lives in Mayfield Heights and attends services at Temple Emanu El. "It's really hard to have one child in college, and with two it was very difficult. We didn't have the money to pay for college so it was a really big help."

Richard Matt and his wife Judy, who live in Mayfield Village, have received loans twice through HFLA. Richard received his first personal loan from HFLA in the early 1990s. He applied for the second loan about two-and-a-half years ago after his mother-in-law passed away. Richard said her insurance didn't cover all the expenses, and Berkowitz-Kumin-Bookatz in Cleveland Heights suggested he seek assistance through HFLA.

"I would heartily recommend people to use HFLA," he said. "They made life a lot easier by not having a big bill sit over your head that has to be taken care of today. They spread out the payments anywhere from 18 months to two years to pay off the loans. They're very cost-conscious and tailor what you pay back to them and the length of time to what you can afford, all with no interest."

The Party110 event will include dinner, a silent auction, jazz music and a celebration of Northeast Ohio's entrepreneurial spirit. A video created just for the event will highlight personal stories of loan recipients.

"For me the video is very impactful," said Michal Marcus, program director at HFLA. "Nobody was prompted and they all spoke from their heart. You can get very caught up in your day-to-day work life and getting everything done, and it was the moment I saw the video I was able to sit back and think, wow, we really are making a difference for people."

Edelman hopes the event also will set the organization up for another 110 years of success.

"Behind every loan is a story of a good person with a genuine need who just needs a little bit of help to succeed," he said.

(Kevin S. Adelstein, publisher and CEO, of the Cleveland Jewish News is a board director of the Hebrew Free Loan Association)


WHAT: Hebrew Free Loan Association of Cleveland's Party 110

WHEN: 6:30 to 10 pm, Nov. 15

WHERE: Temple Emanu El, 4545 Brainard Road, Orange

TICKETS amp; INFO: Single tickets cost $110. Seating is limited. To purchase tickets or for more information, visit