Tandas: How Friends and Family Become a Bank

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What are Tandas? 

Tandas (or cundinas) are informal lending circles where a group of individuals, usually made up of friends or family, agrees to pitch in a fixed amount of money over a period of time. The money is then pooled together and lent to each individual to cover any short-term cash needs, such as paying for a hospital visit or starting a business. 

How do they work? 

Each tandas decides how much each person will contribute and at what time. For example, let’s say a tandas has five people who agree to put in $100 once a month over a period of 5 months, which means that the tandas will accumulate $500 each month. This $500 will be lent to one person, and for every month after the $500 will be lent to a different person until the period is over – the group also decides in what order each person will receive the $500, and by the end everyone will have given $500 and received $500. 

Why are they popular? 

The magic of tandas is that it is like getting a personal loan from a bank without paying any interest! Not only does this help people save money, but it also offers another way to borrow money if a person does not have a credit score in the US. This is why tandas are especially popular with immigrants and in countries where people have less access to banks. 

The risk of tandas is that someone in the group will not pay the fixed amount, or receive the pool of money and run away. This is why trust is very important to tandas, though they tend to work well because few people are willing to take money from their friends or family and never return it. 

Categories Banking

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