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Microfinanceहिंदी में पढ़ें

Weekly or monthly? How to compare two microfinance offers

5 min read
Small shop owner writing figures in a notebook at her desk

Short answer: Don’t compare the size of each payment. Ask each lender for its Key Facts Statement (KFS), the short sheet that lists the loan’s costs. Then compare three numbers: cash in hand after all deductions, total repayable, and the APR (the full yearly cost, with interest and all charges). The lower APR is usually the cheaper loan. You can refuse any product that isn’t part of the loan itself, like a solar lamp or extra insurance. And there’s no penalty for repaying a microfinance loan early.

The situation

Two lenders come to the village. One offers ₹40,000 at ₹470 a week. The other offers ₹40,000 at ₹2,100 a month. “Just ₹63 more a month for the simpler one,” says the second officer. Which is cheaper?

A ₹ example

Fictional. APRs calculated by Paisavy. Always compare the APR printed in each KFS.

Both lenders lend ₹40,000 for 2 years:

  • Offer A (weekly): 104 payments of ₹470. Fee 1% (₹400) + 18% GST (₹72). No insurance.
  • Offer B (monthly): 24 payments of ₹2,100. Fee 1.5% (₹600) + GST (₹108). Credit-linked insurance ₹1,200 taken off the loan. (Credit-linked insurance covers the loan itself, so the debt can be paid if something happens to the borrower.)
Offer A (weekly) Offer B (monthly)
Cash in hand ₹39,528 ₹38,092
Total repayable ₹48,880 ₹50,400
Monthly equivalent ₹2,037 ₹2,100
Cost of the loan ₹9,352 ₹12,308
Approx. APR about 21.9% about 28.5%

Offer B looks simpler. But you get ₹1,436 less in hand and repay ₹1,520 more, and its APR is about 6.6 points higher.

Watch the 5-week months. With weekly payments, a month with five collection days takes 5 × ₹470 = ₹2,350. Plan for it.

Your rights with microfinance offers

  • The APR in the KFS includes interest and all charges, including credit-linked insurance.
  • No non-credit product (other insurance, investments, solar lamps, sewing machines) can be a condition for the loan. Buying it must be your free choice, and the lender must tell you so.
  • The lender can collect only the charges listed in the KFS.
  • There’s no penalty for paying early. Late-payment penalties apply only to the overdue amount (the part you missed), not the whole loan.
  • Lenders must show their lowest, highest and average interest rates in their offices and on their website.
  • Your loan card must be in a language you understand, and it must record every payment.

Which schedule suits you?

People paid daily or weekly, like vendors and daily-wage workers, may find weekly payments easier, even if the monthly total is about the same. People with a monthly salary may prefer monthly payments that fall just after payday. Whichever you choose, add up all the household’s loan payments and compare them with your income in a weak month.

Myths

“The smaller instalment is the cheaper loan.” Compare cash in hand, total repayable and APR.

“I must buy the insurance or product to get the loan.” Only credit-linked insurance can be part of the loan. Anything else is your choice.

“Weekly is always more expensive.” Not always. The APR tells you which costs more.

What to check today

  1. Ask both lenders for the KFS in writing.
  2. Write cash in hand, total repayable and APR side by side.
  3. Mark which add-ons are optional, and say no to the ones you don’t want.

Try it with your own numbers

→ Microfinance offer comparator: enter both offers, weekly, fortnightly or monthly, and see the totals side by side.

Sources and review

Try it with your numbers
Compare two microfinance offers
Open tool →

Educational information, not financial advice. Found an error? Tell us → · Corrections log

Frequently asked questions

How do I compare two microfinance loan offers?

Ask each lender for its KFS (Key Facts Statement, the short sheet with the loan's costs). Then compare cash in hand after all deductions, the total repayable and the APR (the full yearly cost, with interest and all charges). The lower APR is usually the cheaper loan. Don't judge by the size of each payment. The microfinance comparator puts two offers side by side.

Is a weekly loan more expensive than a monthly one?

Not always. The APR tells you which costs more. In our made-up example, both offers lend ₹40,000 for 2 years. The weekly one at ₹470 has an APR of about 21.9%. The monthly one at ₹2,100 comes to about 28.5%, so here the weekly loan is cheaper. With weekly payments, plan for months with five collection days: 5 × ₹470 = ₹2,350.

Do I have to buy insurance to get a microfinance loan?

Only credit-linked insurance can be part of the loan. It covers the loan itself, so the debt can be paid if something happens to the borrower. Its cost is included in the APR. Other products, like extra insurance, investments or a solar lamp, can't be a condition for the loan. Buying them must be your free choice, and the lender must tell you so.

Why is the cash I get less than the loan amount?

Lenders often take fees, GST and insurance off the loan before paying it out. In our made-up Offer B, a ₹40,000 loan has a ₹600 fee, ₹108 GST and ₹1,200 insurance taken off. You get ₹38,092 in hand but still repay ₹50,400. So compare the cash you actually receive, not the loan amount on paper.

Can a microfinance lender charge fees that aren't in the KFS?

No. The lender can collect only the charges listed in the KFS. Late-payment penalties apply only to the overdue amount (the part you missed), not to the whole loan. Your loan card must be in a language you understand, and it must record every payment. If you see a charge you don't recognise, ask about it in writing and keep the reply.

Should I choose weekly or monthly repayments?

Pick the schedule that matches how money comes in. Vendors and daily-wage workers, paid daily or weekly, may find weekly payments easier, even when the monthly total is about the same. People with a monthly salary may prefer payments just after payday. Either way, add up all the household's loan payments and compare them with income in a weak month. Can I afford it? helps.