59 microfinance terms, explained

An asset pledged to secure a loan, such as a vehicle logbook, title deed or household goods.

Interest charged only on what is still owed, so each payment reduces future interest.

In SACCOs, the maximum loan as a multiple of a member's deposits — commonly 3×.

Paying out an approved loan to the member — in cash, to their savings or wallet, by bank transfer or by mobile money.

The true annual cost of a loan including fees and the interest method, so products can be compared fairly. Many regulators require it to be disclosed.

Interest charged on the original loan amount for the whole term, even as the balance falls. Looks cheaper than it is.

Time after disbursement before the first repayment is due. Interest may or may not accrue during it, depending on the product.

Lending to members organised in small groups who meet regularly and often guarantee each other's loans.

A person — in SACCOs usually another member pledging their deposits — who agrees to repay if the borrower can't.

An arrangement where group members are collectively responsible for each other's repayments, replacing physical collateral with social pressure.

The list of instalments for a loan: due dates and how each splits between principal, interest and fees.