INSTRUCTIONS

Carefully review the Key Fact Statement before agreeing and signing a loan contract. You have the right to get a copy of the full loan agreement.

SECTION 1 – KEY TERMS

Process for getting a loan requires that you know the following processes:

Loan Amount: which is the amount a member applies to borrow which starts from the minimum of MK15,000.00 to the highest amount which can reach 3 times of your shares and up to MK10million for civil servants.

Duration of loan agreement: this refers to the period one is required to repay the loan, which starts from 1 month as the shortest to 48 months as the longest period.

Amount received: This amount refers to actual cash a member gets after deductions that are made and are described below, as cost of credit.

Interest rates: This is the interest charged on the loan and is charged per month. Most of Polymed SACCO loans have an interest rate of 4.2% per month on reducing balance method.

Other fees and Charges: These are fees that are charged on top of the interest rate like Loan processing fee and Insurance. Loan processing fee is charged at a rate of 4.2% while insurance premium is charged depending on the amount of the loan and duration.

Effective Interest rate: This is the Total Cost of Credit as a comparable annual percentage which is at 4.2% 7. Total Cost of Credit: This is the sum up of all costs described to be deducted on the loan amount.

Date First Payment is due: is normally a month after taking the loan for private institutions and two months for civil servants.

Number of payments: These are the total amounts it will take to repay the whole loan amount.

Payment Frequency: This is the frequency of how the loan is paid until the whole loan is completed, this can be daily, weekly or monthly. For Polymed SACCO, repayment interval is monthly.

Total Amount to be repaid: This is the full loan amount including capital, interest and all other fees described above.

SECTION TWO - RISKS FOR YOU 1. Late or missing payments may be reported to a credit bureau and may severely affect your credit history and ability to re-borrow. 2. Your interest rate will change based on changes in the Reserve Bank of Malawi‘s Base Lending rate. This change may affect the duration of your loan and your repayment amount. SECTION 3 – UPFRONT AND RECURRING FEES 1. Loan processing fee – 4.2% 2. Loan insurance – Paid in death of a member for the loan, provided by either CIC or NICO with the following categories: Below MK500,000 within 1 year –1.5%, MK500,000 to MK1million within 1 year -2%, MK500,000 to MK1.5million within 1 year-3%. All loans above 12 months = loan amount / 1000 1.25 period 3. Loan recovery – 4% of loan balance– paid when repaying current loan with new loan SECTION 4 – IMPORTANT TERMS AND CONDITIONS TO KNOW 1. Late payment penalties – There are no charges for late payments, only arrears accumulate are paid upon request and when loan repayment period is reached before finishing of payment, no more extra interest is accumulated but only the one accumulated before repayment period. 2. Collateral is required for loans above K4Million which normally in form of a vehicle where ownership is changed and bluebook remain with Polymed SACCO until payment is completed. 3. Renewal shall be allowed after payment of at least 50% of the original principal amount and at least 50% of the term has lapsed. 4. Proceeds of renewal loan is any amount greater than or equal to zero as long as the outstanding balance on the previous loan is deducted. 5. The employer shall be responsible for the collection and remittance to Polymed SACCO of the amortization due on the member-borrower‘s salary loan through payroll deduction. 6. Any overpayment on a previous loan shall be applied to the subsequent loan, if any. Otherwise, the overpayment shall be refunded upon request of the member-borrower. SECTION 5 – YOUR RIGHTS AND OBLIGATION 1. You have a right to a ten-days cooling off period after signing a loan agreement provided that you do not access the funds. During the cool-off period, you can cancel the loan agreement at no cost. 2. You are required to make payments on your loan according to your loan agreement and to notify of any important changes in your situation. 3. If you want to repay your loan earlier/ You can do that without any penalties or fees. 4. If you have any question about Polymed SACCO services, please call 0998300201/03/04, OR 0883338020. Email: polymedsacco@gmail.com, or write to: Polymed SACCO, P.O. Box 30357, Chichiri, Blantyre 5. If you are unsatisfied with responses to your questions or complaint, please contact the Registrar of Finance Institutions by calling 01820299/444 or write to The Director, Registrar of Financial Institutions, Reserve Bank of Malawi, P.O. Box Blantyre or visit www.rbm.com