Mekar adds insurance to loans, brings extra protection for lenders
Peer to peer lending platform MEKAR is among the most popular in Indonesia. It continues to win the heart of lenders in the country and outside thanks to its robust risk management strategies. To reduce lenders’ risks even further, MEKAR recently added credit insurance coverage to some of the loans within the platform.
MEKAR is an Indonesia-based online platform that makes it possible for lenders to fund business loans to MSMEs . It is widely known as one of the platforms with the highest Successful Repayment Rates in the peer to peer lending industry. Since January 2017 when MEKAR first launched its online lending platform, Mekar.id, all lenders in MEKAR have been enjoying getting their repayments on loans that they have funded.
This success is a result of MEKAR’s stringent borrower and partner selection criteria and risk mitigation measures that the platform has put in place, which include requiring its partners to provide a 100% protection guarantee for lender’s money.
MEKAR’s strategies have proven to be effective, evident by its successful repayment rate, which it has always maintained at 100%. Still, MEKAR went the extra mile to protect its lenders even further, this time by adding credit insurance coverage to some of the loans the latter are funding via the platform.
Extra layer of protection
The credit insurance serves as an extra layer of protection for MEKAR’s lenders. It covers the repayment of up to 80% of the principal portion of the loans originated by any of MEKAR’s lending partners that are assigned the “medium”, “high”, or “very high” risk rating.
This means that if, in a very rare case, a borrower defaults on or fails to repay any part of an insured loan that a lender has funded, and in the event that the Lending Partner that originates the loan fails to repay the loan principal and the loan has been in arrears for more than 90 days, the insurer of the loan (the credit insurance company) will repay 40% up to 80% of the loan principal.
The insurance significantly reduces lenders’ risk exposure when funding loans in MEKAR that are originated by lending partners with a higher risk rating. The best part is, it comes with no extra cost both to lenders and borrowers.
While other platforms may offer credit insurance as an add-on facility and at an extra cost, lenders in MEKAR can enjoy the same service without having to pay for insurance premium. The benefit also extends to borrowers in MEKAR; they enjoy the protection without having to see an increase in their interest rate.