Many people will seek out loan services when they are in dire need. Typically, they cannot find funds in other places, and choose to seek help from a financial institution or lending service. There are a myriad of reasons that people seek loans out, and to match these, a wide range of loans that are available. L-Pesa microloans are financial solutions that help individuals experience financial freedom.
The Pay Day Loan
The Pay Day Loan is a loan that is designed to help an individual ÔÇÿmake itÔÇÖ until their next pay day. With this type of loan, the salary or wages are used as security, and a person is able to borrow a percentage of their salary. Normally, this loan is given out in an emergency, and can be received within a day or so of application. Due to its convenience and speed, it attracts a high interest rate, and if not paid in time, can trap someone in a downward financial spiral. Furthermore, the installments are typically quite high, as the money lent out is meant to be recovered as soon as possible.
The L-Pesa Difference
The L-Pesa loan is sometimes confused with a Pay Day Loan but they are quite different. To begin with, L-Pesa offers micro-loans. This means that a person borrows small amounts, and if they prove that they are able to pay the loans back in time, they can borrow higher amounts. Furthermore, these loans are not to help people make it to their pay day. L-Pesa loans are intended to help those who have been financially marginalized attain financial freedom.
L-Pesa loans also do not require any security from the borrowers. In fact, all borrowers need to do is put in their information in the L-Pesa system and a quick back check is carried out. Within moments, it is possible to get access to finance. There is no need to wait for up to a day for approvals.
The repayment schedule for this loan is spread out over a good period of time, to save the applicant from making large payments that may be difficult to maintain. Instead, L-Pesa loans are geared towards being manageable, and the repayment amounts are small in nature. Furthermore, the interest rate that is charged on an L-Pesa microloan is typically lower than the interest one would pay on a Pay Day loan.
L-Pesa and Financial Inclusion
The L-Pesa microloan service is making waves in Africa, as people are starting to learn the options that they have when it comes to their finances. With L-Pesa, it is possible to fully understand the way that finance works. Borrowers are given an education on interest, and how the interest is calculated on the amount borrowed. In addition, there is teaching on the importance of maintaining a credit score, and the benefits that come with that as well. By the time anyone has finished using the L-Pesa service, they will be closer to financial freedom, not just because they have money, but also because they understand finance.