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Micro Loans Calculator
Track informal loans — see exactly what's owed, when, and how interest adds up.
Enter loan details
Fill in the principal, term, and interest rate to see the full breakdown.
Micro Loan Interest Explained
How Flat Interest Works
Your Rights Under the Money-Lenders Act
K 1,000 Loan - Cost by Term
| Term | Interest | Total Owed |
|---|---|---|
| 1 week | K 100.00 | K 1,100.00 |
| 2 weeks | K 200.00 | K 1,200.00 |
| 4 weeks | K 400.00 | K 1,400.00 |
| 8 weeks | K 800.00 | K 1,800.00 |
| 12 weeks | K 1,200.00 | K 2,200.00 |
Frequently Asked Questions
How do micro loans work in Zambia?
Micro loans are small, short-term loans from informal lenders, savings groups (chilimba), or microfinance institutions. They typically charge a flat interest rate per week or month on the original principal. Common rates range from 10-30% per month.
What is the difference between flat and reducing balance interest?
Flat interest is charged on the full original principal for the entire term, even as you repay. Reducing balance interest only applies to what you still owe. A flat rate of 10% per week costs significantly more than the same rate on a reducing balance.
What is the true annual cost of a micro loan?
A typical informal loan charges around 10% per week flat. Over 4 weeks this can equate to an effective annual rate well above 100% - far higher than the headline rate suggests.
How is total repayment calculated?
Total repayment = Principal + (Principal x flat rate x number of periods). For example, a K 1,000 loan at 10% per week over 4 weeks costs K 400.00 in interest, totalling K 1,400.00.
Are micro loans regulated in Zambia?
Yes. The Money-Lenders Act (Cap 398) caps interest at 48% per year. Anything above that is presumed harsh and unconscionable. Compound interest is also illegal. Your lender must give you a written contract before the money is lent, and you can demand a loan statement at any time.
What are my rights as a borrower under Zambian law?
Under the Money-Lenders Act you have several protections: interest cannot exceed 48% per year, compound interest is banned, you must receive a written contract before money changes hands, you can request a loan statement at any time, and courts can reopen transactions they consider harsh or unconscionable.
What can I do if my lender charges more than 48% per year?
Under Section 14 of the Money-Lenders Act, you can apply to court to have the transaction reopened. The court can reduce the amount owed to what it considers fair, order refunds of overpayments, and set aside or revise any security given for the loan.
How is microloan interest calculated? Show me an example.
Example: You borrow K1,000 at 10% per week (flat rate) for 4 weeks. Weekly interest = K1,000 x 10% = K100. Total interest over 4 weeks = K400. Total repayment = K1,400. That 10%/week annualises to 520% - well above the legal cap of 48% per year.
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All postsWhat the Money-Lenders Act Says About Interest Rates in Zambia
The Money-Lenders Act (Cap 398) caps interest at 48% per year, bans compound interest, and gives borrowers the right to challenge unfair loans in court.
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Sources
Caps interest at 48% per annum, prohibits compound interest, requires written contracts, and gives courts power to reopen harsh transactions.
Regulatory framework for licensed microfinance institutions and lending practices.
Zamcalc results are estimates only. Figures are based on rates published by official sources. Verify with the relevant authority or a licensed professional before taking any action. Zamcalc is not liable for decisions based on these figures.