How To Avoid Loan Repayment Fatigue
Many people have seen the word LOAN as a huge burden that they wish to never carry in their lives. In 2018, when I secured a job at a Microfinance company in Lagos as Account Officer, after few discussions with some close friends and family members, I became very insecure to tell people what I do for a living, “selling loans”
My first month on the job was a really a tough one for me as any attempt to cold call or market to prospective clients were met with harsh tones of people who believed “loan” is a bondage and burden they should never bring upon themselves. As time goes on, I braced up myself, sharpened my communication skills then came up with a strategy that changed the whole situation for me.
During my research from an average worker who confided in me, he made me understand that the last loan he got from his employer really made things worse for him for a period of 16 months as a result of the repayment, which was an automatic deduction from his net income before his salary drops in the account. He swore that the experience has thought him to stay away from loan in his life. From his explanation, I got to know that he was being affected by the repayment because the monthly rental was about 65% of his net income, leaving him with 35% to cater for the month, and he was on the repayment for almost a year and a half.
From his lamentations, I quickly realized the lapses which caused his horrible experience, then I latched on to it. It was obvious he suffered from repayment fatigue caused mainly because he was servicing the loan from his employer with a huge chunk of 65% of his monthly salary. I managed to convince him to listen to me, even if he won’t be getting a loan at that moment, and we got talking. I quickly brought out the handbook given to us during our training at my company’s Academy and opened to Debt-To-Income(DTI) chapter. I explained to him that what caused his horrible experience was as a result of getting a higher loan amount than his salary can service. I made him realise that his focus when requesting for a loan is the monthly rental and how long, as a loan repayment will surely affect his lifestyle for the tenor of the loan, so he needs to plan strategically.
I educated him about DTI, which is the ratio of the monthly loan repayment to the income which is used to secure the loan. I explained that it is best to limit a monthly repayment for loan to be 30% of the salary so that the remaining 70% will be enough to fend for the salary circle. After the explanation, his perception of loan changed as he got enlightened on the need to be concerned about the monthly rentals, and not get huge loans that will later become a burden.