On-time repayment rate now includes number of installments

Discussion in 'Announcements' started by Julia Kurnia, Oct 15, 2013.

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  1. Julia Kurnia

    Julia Kurnia Director, Zidisha Zidisha Staff

    Dear all,

    The borrower on-time repayment rate now includes both the percentage of monthly repayments that have been made on time, and the number of monthly installments that have been due in parentheses.

    The purpose is to reflect the stronger track record of the members who have maintained high repayment rates over a long period of time.

    This enhancement is thanks to lender feedback which has highlighted the difficulty in judging the credit-worthiness of a applicants who repay early loans over very short periods of time based on the on-time repayment rate alone. In particular, suggestions from dgarrard, Evelyn and mewesten informed the current design of the repayment rate metric.

    Finally, the sorting of the fundraising loan application page now defaults to place the applicants with highest on-time repayment rates, weighted for number of loans repaid, at the top. The intent is to strengthen the incentive for members to maintain high on-time repayment rates, and to communicate to prospective lenders that we consider these applicants to be the most credit-worthy. The other sorting options remain and users may change the default sorting as desired.

    I'd welcome feedback on these changes and comments for further improvements we can make to our reputation metrics.

    Best,

    Julia
     
    mewesten, KirstenShute and Evelyn like this.
  2. K M

    K M Gold Member

    Thanks, this should be really helpful.

    I'd also like to suggest adding a "sort by" of planned repayment period. I fully realize that this can be modified, but now with bigger/longer loans being made, it would be nice to be able to sort for length. This way it would be easier to balance a lending portfolio.
     
  3. Evelyn

    Evelyn Forum Member

    Now that I see it implemented I think it is much clearer.

    I really like this new default setting a lot with the emphasis on the 100 % On-Time Repayment Rate for the monthly installments being first at the top of the list. I think this is excellent that the more established borrowers wind up being featured first.

    This also makes it much clearer that the new number in parenthesis is referring to the number of monthly payments and not to the number of loans. A (2) without the word “payments” next to it might not have been clear. However with the list sorted this way it is now very clearly not a reference to the number of loans repaid on-time. Currently the first borrower listed has a (33) next to the rating.

    @Julia Kurnia Thanks also for the mention along with dgarrard and mewesten. Happy to help.
     
  4. Julia Kurnia

    Julia Kurnia Director, Zidisha Zidisha Staff

    Hi Evelyn, thanks for reviewing this for us. In our original discussion of this feature, you had pointed out that "On-time repayment rate" did not make it clear that the rate referred to the percentage of monthly installments made on time. We were looking for a label that made the fact that the rate measures all repayments a bit more intuitive without having too many words, and came up with "On-time repayments."

    The traditional microfinance model treats all borrowers roughly the same, with the same deal offered to mediocre and excellent participants alike. Zidisha is more similar to eBay, in which a person's track record is what determines whether and at what price others in the community will do business with them. This is in line with our vision that the only differentiator among our members worldwide is their own performance.
     
  5. KirstenShute

    KirstenShute Gold Member

    Thanks for the updates. In particular, I find the new sorting method useful. The default to random sorting made it hard for me to find loans after I'd looked at a profile.

    One question: what happened to the positive feedback rating on the borrowers' thumbnails? When I look at the thumbnails, I only see the on-time repayment rate/amount and two lines underneath it the borrower's location, e.g.

    "On-Time Repayments: 100% (33)

    Nakuru, Kenya"

    Was the feedback rating left out on purpose (since people may consider the repayment info more useful) or is it an error?
     
    Evelyn likes this.
  6. Julia Kurnia

    Julia Kurnia Director, Zidisha Zidisha Staff

    Hi KirstenShute, we left out the feedback rating in the loan summary area simply because there is only so much information that most users, especially new lenders, can take in at once. We try to keep a clean and simple look in our website and not to overwhelm users with too much to read and figure out.

    In general, when we add new information or features we should either remove old ones to make room, or at least make them less prominent. In this case, we left the feedback rating and link to previous lender comments unchanged in the profile page itself.
     
    Evelyn likes this.
  7. KirstenShute

    KirstenShute Gold Member

    No problem, I was just curious since it wasn't in the official announcement. Visually the extra space was a little surprising for me, since the borrowers' "reason for loan" excerpt is single-spaced, but I'm sure I'm just picky :)
     
  8. Evelyn

    Evelyn Forum Member

    @Julia Kurnia You're welcome. Yes, and in looking again I see that you did tweak it to be "On-time repayments" as the title. This adds even further to the clarity. Sorry if my last post was not quite clear because I was referring back to the previous suggestion of including the word "payment" in the parentheses (2 payments), which might have been too long for the space. The monthly concept comes across better now.

    In the new pop-up language I notice something that comes across to me as incorrect.

    It reads: "The On-Time Repayment Rate is the percentage of all monthly installments that this member has paid on time (within ten days of the due date), for all loans that he or she has taken since joining Zidisha. The number displayed in parentheses is the total number of monthly installments that have been due, over which the On-Time Repayment Rate is measured."

    However the number displayed in the parentheses is actually the number of payments made ….. not the number of monthly installments due as outlined in the repayment schedule section.

    For example, this borrower had 13 monthly installments due, but actually only made 3 large payments satisfying the entire loan. So the number displayed is (3).

    See https://www.zidisha.org/microfinance/loan/yezina/3112.html

    To me it would be more accurate to say: "The number displayed in parentheses is the total number of payments made to satisfy the monthly installments that have been due, over which the On-Time Repayment Rate is measured," or some other similar wording.
     
  9. Evelyn

    Evelyn Forum Member

  10. Julia Kurnia

    Julia Kurnia Director, Zidisha Zidisha Staff

    Hi Evelyn, thanks for alerting us to this source of confusion.

    This reason the number is two in this example is that the website considers in the "number of installments due" category only the installments that have been due before a loan is fully repaid, on the premise that once a loan is repaid the remaining later installments are no longer due.

    In this case, Mr. Chandugui made three payments but the latter two were made before the loan's third installment fell due. That is why the website displays "2" as the number of repayment installments that had been due over the period the loan was held.

    I'd welcome suggestions for ways we can present the definition to make it more clear.
     
  11. Evelyn

    Evelyn Forum Member

    OK, I see. Even though the Oct. 4 and Oct 8 payments were separate amounts applied to the remaining months they both fell before the Oct 15 installment due date. So even though two payments were made it only counts as making one installment on time.

    So my suggested tweaking above is NOT correct: ("The number displayed in parentheses is the total number of payments made to satisfy the monthly installments that have been due, over which the On-Time Repayment Rate is measured," or some other similar wording.)

    Currently the pop-up reads: "The On-Time Repayment Rate is the percentage of all monthly installments that this member has paid on time (within ten days of the due date), for all loans that he or she has taken since joining Zidisha. The number displayed in parentheses is the total number of monthly installments that have been due, over which the On-Time Repayment Rate is measured."

    I now understand what you are trying to say, but it's hard to relay in the pop-up language so it will come across clearly to people without the benefit of discussing an example. Every rewording I'm thinking of at the moment still could be interpreted as applying to the entire range of repayment due dates listed and not just up until the date of the last payment.
     
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