What is a daily collection loan?
A daily collection loan is a short-term loan where borrowers make small, frequent payments (usually daily or on specific days) to repay the loan. These loans are common in microfinance and small lending operations.
How is daily loan interest calculated?
Daily loan interest is calculated using the simple interest formula: Interest = Principal × Rate × Time. For daily calculations, Time is expressed in days. For example, ₹10,000 at 15% annual rate for 90 days = ₹10,000 × 0.15 × (90/365) = ₹369.86.
What are the typical terms for daily collection loans?
Daily collection loans typically have short tenures (7-180 days), small loan amounts (₹1,000-₹50,000), and higher interest rates (12-30% annually). Collections are usually made on specific days of the week, often excluding Sundays.
What are the advantages of daily collection loans?
Advantages include: 1) Smaller, manageable daily payments, 2) Faster debt repayment, 3) Lower risk of default, 4) Better cash flow management for borrowers, 5) Easier tracking for lenders, and 6) Flexibility in collection days.
How does daily collection differ from weekly/monthly?
Daily collection involves more frequent but smaller payments compared to weekly or monthly collections. This reduces the outstanding balance faster, resulting in lower total interest. However, it requires more administrative effort from lenders.
Can I customize collection days?
Yes, our calculator allows you to select specific days for collections. This is useful for matching collection days with the borrower's cash flow patterns, such as receiving income on specific days of the week.
What happens if I miss a collection day?
Missing a collection day typically results in the payment being carried forward to the next collection day. Some lenders may charge a small penalty or late fee. It's important to maintain regular payments to avoid additional costs.
Are daily collection loans safe?
Daily collection loans from reputable microfinance institutions are generally safe. However, borrowers should verify the lender's credentials, understand all terms and fees, and ensure the interest rates comply with local regulations before taking a loan.