I really enjoy Kiva.org

[topwaystosave]

I think Kiva.org is a unique way to give. You make small loans to people in third world countries who would other wise would have a hard time raising capital or no way at all. They repay the loan at zero percent interest, but you do usually get your money back. It can really make a difference in their lifes and really all you do is lose a few months on interest. Definitely worth checking out.

[tmvijai]

Just signed up yesterday and made 2 loans. I also found out another organization which is just start out.. United Prosperity | Social Guarantees trying out in India. Check it out.

[kreal]

Originally Posted by topwaystosave

I think Kiva.org is a unique way to give. You make small loans to people in third world countries who would other wise would have a hard time raising capital or no way at all. They repay the loan at zero percent interest, but you do usually get your money back. It can really make a difference in their lifes and really all you do is lose a few months on interest. Definitely worth checking out.

%0 interest ?

Are you sure about that.

I suggest you to calculate how many months they will pay and how much they will pay each month.

There is an interest rate around %15 a year or two

And also sometimes they say pay back in 20 months but you can only see 18 months payment terms

When you calculate those 18 months its without interest but where are the those 2 months?

I hope there isnt anything fishy about it

[kreal]

Originally Posted by RedThunderBird

you know kreal ; I welcomed the poster , but did not put the attention as you did to posted material ===== thank you for pointing it out ===== fish any one ?

I hope i am wrong because it looks like a great site and i read their terms of service, they mention about interest too but i don't know.

i hope someone can explain this

[Stuart]

I think the interest rates charged by local field partners can seem high at first, but Kiva has a small section on their site in their About -> About Microfinance -> 6. Why are microcredit interest rates so high? section.

The nature of microcredit – small loans – is such that interest rates need to be high to return the cost of the loan.
"There are three kinds of costs the MFI has to cover when it makes microloans. The first two, the cost of the money that it lends and the cost of loan defaults, are proportional to the amount lent. For instance, if the cost paid by the MFI for the money it lends is 10%, and it experiences defaults of 1% of the amount lent, then these two costs will total $11 for a loan of $100, and $55 for a loan of $500. An interest rate of 11% of the loan amount thus covers both these costs for either loan.

The third type of cost, transaction costs, is not proportional to the amount lent. The transaction cost of the $500 loan is not much different from the transaction cost of the $100 loan. Both loans require roughly the same amount of staff time for meeting with the borrower to appraise the loan, processing the loan disbursement and repayments, and follow-up monitoring. Suppose that the transaction cost is $25 per loan and that the loans are for one year. To break even on the $500 loan, the MFI would need to collect interest of $50 + 5 + $25 = $80, which represents an annual interest rate of 16%. To break even on the $100 loan, the MFI would need to collect interest of $10 + 1 + $25 = $36, which is an interest rate of 36%. At first glance, a rate this high looks abusive to many people, especially when the clients are poor. But in fact, this interest rate simply reflects the basic reality that when loan sizes get very small, transaction costs loom larger because these costs can't be cut below certain minimums."

There's more information on it at the CGAP site (linked to on the Kiva page above).

Essentially, if field partners are to sustain themselves financially, they're required to charge interest rates that cover their costs. Some microfinance institutions do prioritise lending at lower rates to be more affordable for their borrowers, but they accordingly have to rely on support from donations to remain financially viable.
Microfinance isn't ever going to be a magic bullet to totally eliminate poverty, but I do think it's had a lot of success in raising millions of peoples' living standards, and that the relatively high interest rates haven't generally stood in the way of that happening.

[tmvijai]

I am also hoping the MFI's don't charge hefty interest rates for their profit and turn away the entreprenuers. It spoils the whole purpose. KIVA might/should regulate their rates otherwise it will be their choice to charge any rate.

[Stuart]

Originally Posted by tmvijai

I am also hoping the MFI's don't charge hefty interest rates for their profit and turn away the entreprenuers. It spoils the whole purpose. KIVA might/should regulate their rates otherwise it will be their choice to charge any rate.

They have this section on their 'Information for Prospective Field Partners' page:

In order to become a Field Partner with Kiva, a microfinance institution must, at a minimum:

Serve at least 1,000 active borrowers with microfinance services
Have a history (at least 2-3 years) of lending to poor, excluded, and/or vulnerable people for the purpose of alleviating poverty or reducing vulnerability
Be registered as a legal entity in its country of operation
Have at least 1 year of financial audits
We also prefer an MFI have a profile on the MIX Market.

So I think that policy of having at least 1,000 active borrowers, having a history of lending to the poor for poverty alleviation, etc. should help to avoid Kiva partnering with disreputable MFIs. They also display the average interest rate for borrowers with their Field Partners and for borrowers with other local lenders, so I think that's another good element of transparency.

[tmvijai]

Agree. They can say anything in papers. But I doubt it all works in the reality. You never know these MFI's are true their beliefs. They can also show the good things in paper to get these loans and use these funds for other loans as well. I guess KIVA has field partner coordinators which monitors these field partners to ensure they do what they say.

[junosama]

Yeah KIVA has grown HUGEEEE since it was started. its very popular for businesses to give back nowadays so a lot of businesses like to display that they donate to kiva cause its very well known.

It was smart of kiva to include all those web graphics you can put on your website.

[SoCoolGifts]

I've seen this Kiva but I wondered if it really does get to the intended people? Is there a screening process? Seems like a great idea and you can make a big impact for very little money.

[Saving_spree]

I will check out and sign up for sure...

[carshelpingveterans]

Yeah, it seems like a good idea, but be careful with the "loans"... Just a idea.