At the Kuyasa Fund we believe that everyone is creditworthy if given a fair chance. But, in order to enter into the commitment of taking out a loan, clients need to have adequate information. Part of this involves unpacking the lingo of loans. Financial jargon is not easy to grasp in the first place, but in a context of delayed access to financial resources (and discourse) as well as limited literacy, it is important to make this jargon more accessible. Global financial inclusion recognises the importance of financial literacy, building financial capability and ensuring adequate customer protection policies.
During both loan marketing and signing processes our staff explain to clients the relevant terms and conditions of taking out a Kuyasa Fund loan. However, this information may be 1. a lot to take in, 2. overlooked in the excitement of being able to take out a loan and 3. forgotten. In light of this, our Client Education Booklet is intended to be a resource for clients as they navigate their loan journey. In it we’ve defined some loan lingo relevant to the industry and our organisation.
Here is some of the loan lingo we’ve defined:
Lender = someone who makes money available to another with the expectation that the money will be repaid
Borrower = someone who has received money from a lender
Microcredit = small loans
Loan = a sum of money that you borrow that needs to be paid back with interest over a specific time
Principal/capital = the amount of money you borrow
Instalments = equal sums of money due for loans spread over a period of time
Loan term = the period of time over which instalments are paid
Interest = the fee paid on borrowed money
Interest rate = the rate at which the fee is charged; the amount of interest
Initiation fee = the cost of processing your loan
Security deposit = sum of money paid in advance to protect a lender
Debit order = a lender, that you have given permission, can collect money straight from your bank account. You allow money to be taken from your bank account and paid to someone else automatically on a set day every month.
Arrears = money that is owed and should have been paid earlier
Budget = a plan of all the money you are earning and spending
Saving = putting away money for the future
There is also some Kuyasa specific lingo that needs to be defined:
LDO = Loan’s Development Officer, our field staff who work with clients throughout their loan process. They are the link between the client and the organisation.
CSC = Customer Service Centre, A Kuyasa Fund container located in our client hubs. Here marketing is done and queries can be addressed by our CSC Representatives.
PTP = Promise to Pay, an agreement made with a Kuyasa staff member as to when and how a client will pay their instalment.
A Kuyasa CSC container
We found the following resources helpful as we put together our booklet: