CedisPay

Principle: Responsible Lending Based on Income Capacity

CedisPay believes in a customer-centric approach, tailoring loan solutions to meet the unique circumstances and goals of each individual. By considering factors such as income, credit history, and financial objectives, CedisPay ensures that customers receive personalized loan products that suit their needs precisely. This approach ensures that customers obtain the right amount of funding with suitable repayment terms, setting them on the path to financial success.

Credit Behavior and Score: Analyzing an individual's past credit history and score
Monthly Income: Considering the regular income, a person receives
Income Stability: Evaluating income stability or volatility
Current Debt Level: Examining existing debt levels
Current Expenses: Understanding ongoing monthly expenses
Savings and Investments: Reviewing savings and investment habits, including account balances
Automated Loan Arrangements: Assessing any automated loan arrangements with payroll processing companies, employers, or past automated loan repayment history
Availability and Security: Exploring availability and security, such as pensions, savings, or investments
Insurance Coverage: Ensuring insurance coverage to protect against job loss or medical expenses.

Executive summary

In CedisPay, the customer's loan amount is determined not by their request but by a meticulous assessment of their financial capacity, considering factors such as income, expenses, and other behaviors. This aligns with CedisPay's responsible lending practices, emphasizing the principle of providing loans based on the individual's income capacity rather than the requested amount. This approach ensures a customized and responsible lending experience, reflecting CedisPay's commitment to prudent financial practices.

Customer's Income Adjustment: Income is modified to account for factors like volatility, housing expenses, business costs, everyday expenses, one-off expenses, and payments to high-risk merchants
Deductions: Assumed expenses, assumed savings rates, and client-provided information on debt expenses are considered for deductions
Available Income: The resulting figure after deducting applicable amounts from the customer's income is determined.
Future Residual Income: The available income is multiplied by the future loan period, projecting the anticipated future residual income
Present Value of the Future Residual Income: Future residual income is present-valued using the customer's determined interest rate over the approved loan term, not exceeding 12 months
Haircut Adjustment: Additional adjustments are made for potential emergencies, considering habits such as savings, insurance coverage, automated payment behavior, limited employment/business stability, and credit scores below 80
Final Loan Amount Adjustment by Deviation from CedisPay Final DTI Guidelines:
- Specific criteria are established to ensure borrowers' financial well-being, limiting adjustments to the final loan amount
- For unsecured loans, the maximum allowable DTI threshold is 30%.
- For secured loans, the threshold extends to 43%.
- These DTI thresholds uphold responsible lending practices, ensuring borrowers can manage loan repayments comfortably
- Actions for Loans Exceeding DTI Thresholds: i) Reduce Loan Amount: If exceeding the threshold by a small margin, ii) Extend Loan Term: If reducing the loan amount is not feasible, extending the term helps lower monthly payments

Loan Amount Determination in CedisPay: Comprehensive Model

Customer's Income: Serving as the initial point for computation, the customer's income undergoes adjustments to factor in elements like income volatility, housing expenses, business costs, everyday expenses, one-off expenses, and payments to high-risk merchants
Deductions: Various deductions are applied, encompassing assumed expenses, assumed savings rates, and information provided by the client regarding debt expenses
Available Income: The resultant figure after deducting applicable amounts from the customer's income
Future Residual Income: The available income is multiplied by the future loan period, representing the anticipated future residual income
Present Value of the Future Residual Income: The future residual income is present-valued using the customer's determined interest rate over the approved loan term, not exceeding 12 months.
Haircut: An additional adjustment accounting for potential emergencies, taking into consideration habits such as savings, insurance coverage, automated payment behavior, limited employment/business stability, and credit scores below 80

Loan Amount Determination for Secured Loans (Pension and Investment Backed Loans)

Lower of 3.5X monthly income less monthly debt expenses and 80% of the investment value, with a maximum of GHS 20,000
Haircut: A supplementary adjustment factoring in potential emergencies and considering habits like savings, insurance coverage, automated payment behavior, limited employment/business stability, and credit scores below 80

Loan Amount Determination for Unsecured Payroll Deduction Loan

Lower of 3X monthly income less monthly debt expenses and a maximum of GHS 10,000
Haircut: An additional adjustment considering potential emergencies and taking into account habits like savings, insurance coverage, automated payment behavior, limited employment/business stability, and credit scores below 80.

CedisPay's commitment to responsible lending ensures that the eligible loan amount is ascertained through a holistic assessment, considering an individual's financial capacity and behavior for a tailored and responsible loan offering.

CedisPay's Final DTI (Debt-to-Income) Adjustment for Responsible Lending

At CedisPay, our commitment to responsible lending practices involves a meticulous assessment of the borrower's Debt-to-Income (DTI) ratio, a crucial step in our underwriting process. This policy establishes specific DTI thresholds and guidelines to maintain a balance between meeting customers' financial needs and mitigating lending risks

Unsecured Loans (e.g., Loan Me and Capital Me):
- PTI (Payment-to-Income) ratio threshold: 30%.
- PTI ratio is defined as total monthly loan payments divided by the borrower's monthly income.
- Total monthly loan payments for unsecured loans should not exceed 30% of the borrower's monthly income.
Secured Loans (e.g., Pension-Backed Loans):
- DTI ratio threshold: 43%.
- Secured loans involve collateral, reducing lending risk, allowing for a slightly higher PTI ratio without significantly increasing risk

Actions for Loans Exceeding DTI Thresholds

Reduce Loan Amount: If the borrower's DTI exceeds the threshold by a small margin, we may reduce the loan amount to align with their financial capacity
Extend Loan Term: If reducing the loan amount is not feasible, we may extend the loan term to lower the monthly payment, helping the borrower meet the DTI threshold

CedisPay's stringent adherence to this DTI policy underscores our commitment to responsible lending, ensuring customers receive loans tailored to their financial capacity while minimizing lending risks.

Understanding the Adjustment

Responsible Lending: Our core principle is to ensure that your financial commitments remain manageable. A high DTI indicates that the originally requested loan amount could potentially strain your financial capacity
Financial Stability: By making this adjustment, we aim to help you manage your debt comfortably without jeopardizing your overall financial stability
Achieving Your Goals: We are dedicated to assisting you in reaching your financial objectives. A lower, more manageable loan amount will likely be more effective in helping you achieve your goals.

CedisPay Determination of Eligible Loan Amount