I am a microlender. One may ask what that is. I loan individuals in third world countries money through an organization called Kiva. I currently have two loans out, one for a single mom in Africa that sells prepaid phone cards to support her 5 kids. She needs a new supply of phone cards and I helped in making that happen. The other is to a small family in Mexico who needed a wall built around their home for safety purposes (apparently these 8 foot monstrosities are common in Mexico). Again, they now have a wall and I receive payments back from them on a schedule that is agreed upon through Kiva. I feel amazing in the fact that I believe in the old saying, if you give a man a fish you feed him for one day but if you teach him to fish you feed him for a lifetime.
My love for microlending goes even deeper than that though. When I first applied for computer school I couldn't find a loan anywhere, I knew that computers were a booming industry and I knew that I would excel but I needed the money. After being denied from everywhere I went through a small lender in Woodland Park that charged me obscene interest rates, but gave me an unsecured loan. I paid him back every penny with interest and when someone asked me why I didn't refinance the loan to lower the interest I explained that he trusted me when no one else would, in my mind he has earned this interest. I now make a great living and love my job all because one capitalist lender saw a way to make a buck.
With the above described experience in mind, I just read an article about Microlending that saddened me. It was talking about the interest rates that companies are making off the loans that they give to these third world countries and how shameful it is. Is it really so shameful? Have these people in other countries exhausted their other options like I did and this is their last resort? Do they mind paying back the large sums of interest because after all they now have phone cards to sell and a wall for safety?
For the record I make no interest on the loans that I give, but if I ran a bank I would. Not only would the interest ensure me that I could make a living but also it would allow me to absorb the costs of the loans that are not paid back, unsecured means exactly that...there is nothing to secure the loan.