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Online tool to compare loans

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A woman receives money from a finance officer at Prasac Microfinance Institution, the country’s largest MFI, in Phnom Penh. Hong Menea

Online tool to compare loans

Spean Luy, the first dedicated website that allows users to compare the terms and interest rates of loan products from various Cambodian lenders, is looking to help borrowers make better financial decisions in a diverse and often confusing credit market.

The start-up, which recently launched its web-based loans comparison platform, lets potential borrowers find various loan options from some of the Kingdom’s biggest MFIs. Individuals and small businesses can compare loans by their interest rates, and search for specific products according to size, duration or purpose.

The site’s founder, Japanese-born Yuta Nagano, said his goal is to create “Financial Inclusion 2.0”, where people have a wide range of financial products to choose from to improve their quality of life, and can benefit from lower interest rates.

“I want this to be a bridge between borrowers and banks,” he said.

“The main mission for this is that I wanted to improve the banking industry, especially the efficiency of banks and microfinance firms. The other thing is that I wanted to improve the financial literacy of borrowers.”

Currently the platform only lists information on loans, but Nagano expects to secure between four and six official partnerships with financial institutions in the coming two months, allowing users to apply directly for loans on the Spean Luy website. He also plans to increase the number of MFIs tracked by the site, and eventually add banks.

Nagano explained that the free-to-use platform compiles and presents comparative loan information that previously could only be obtained by visiting the branch or website of each individual financial institution.

“Why do borrowers come to my website? Because it is easy, safe and free,” he said. “[For banks and MFIs] there is no reason not to join this because the listing is for free and I charge them [a commission] only once the loan gets approved.

Through the website and the company’s Facebook page, Nagano also plans to provide educational information in the form of videos and articles on financial products and general money habits to increase the financial literacy of its users.

“My first focus is young, middle class generations of Cambodians, 20 to 40 years old – people who want to buy a car or a borey [unit in a gated community] with loans, as well as people who want to expand their own businesses,” he said.

Organisations seeking to improve financial literacy and encourage responsible lending practices say a platform like Spean Luy could be particularly useful in Cambodia, where the banking sector is characterised by low financial literacy, a dizzying number of microfinance institutions (MFIs) and notoriously high interest rates.

Shane Nichols, CEO of Good Return, an Australian NGO that promotes financial inclusion and responsible lending, said providing greater access to information on financial products would help address the knowledge gap that many people in the Kingdom have regarding loans and money.

“There is a lot of misinformation and confusion around products and so I think any website or similar mechanism that is offering accurate and comparable information is a real bonus for the sector,” he said.

Nichols said part of the problem in the Kingdom is that there was not a uniform way to present loan information, adding to the confusion customers have when applying for financial products. He said a platform like Spean Luy could be highly useful if it accurately presents loan information in a way that can make each product easily comparable.

“People have different ways of quoting interest rates and often people focus on interest rates but they ignore fees and charges that are sometimes more hidden,” he said.

“Quite often, because [loan products] are presented in different ways by different companies, it is difficult to compare one alongside the other and so that makes it very difficult for people to understand and compare.”

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