What are the charges if the borrower misses a monthly payment?
The repayment due date typically falls on the first day of the month. A loan installment is overdue when the borrower fails to pay in full after the 7-day grace period. From the 8th day, the overdue amount is charged daily at prevailing interest rate plus 3% or more, counting from the due date until the day the due amount is paid.
For example, the customer pays on 8th day. Late payment charge = $500 * (18% + 3%) / 360 days * 7 late days = $2.04.
If the borrower misses three monthly payments in a row, the prevailing interest rate will be increased by 2% p.a. or more. For example, instead of paying interest at 18%, the borrower will pay at 20% for the remaining outstanding amount.