Features & Sacco Leadership

How to borrow money from a SACCO without guarantors

How to borrow money from a SACCO without guarantors

Savings and Credit Cooperative Organizations (SACCOs) are popular for their member-friendly loan conditions and lower interest rates compared to traditional banks. Unlike banks, SACCOs often offer loans with minimal requirements, and many do not require collateral, only a guarantor. However, if you find yourself in a situation where you cannot secure a guarantor, there are still ways to access a loan from your SACCO. Here’s how:

  1. Consider a Check-Off Loan

A check-off loan is a convenient option if you’re a salaried employee and cannot find a guarantor. This type of loan allows you to borrow money, with repayments automatically deducted from your salary each month. Here’s how it works:

  • Application and Assessment: You apply for a check-off loan, and the SACCO will assess your eligibility based on your salary.
  • Repayment Arrangement: If approved, you agree on the repayment period and monthly installments.
  • Automatic Deductions: Your employer deducts the loan repayments from your salary before depositing the remaining amount into your account. This automated process ensures timely payments and reduces the risk of missing installments.

Check-off loans are attractive because they offer the convenience of automatic deductions, favorable SACCO terms, and potentially lower interest rates since the lender has a secure repayment method.

  1. Borrow Against Your Savings

Another viable option is to borrow against your savings within the SACCO. This method is available to all members, whether salaried or not. Here’s how it works:

  • Savings as Collateral: If you have sufficient savings in your SACCO, you can borrow an amount equal to or less than your savings.
  • No Guarantor Needed: The loan is secured by your own savings, so you won’t need an additional guarantor. If you default on the loan, the SACCO will use your savings to clear the debt.
  • Retain Benefits: Borrowing against your savings allows you to maintain the benefits of your savings, such as earning interest and receiving dividends.
  1. Recruit Friends and Family

If you are a new member or have recently joined a SACCO, consider recruiting friends or family members to join the SACCO. Here’s how this can help:

  • Guarantor Support: Having friends or family members in the SACCO increases the likelihood of securing a guarantor when needed.
  • Mutual Benefits: Your loved ones will also benefit from the SACCO’s savings and credit services, potentially gaining access to favorable financial products and returns.

This option may take some time but can be effective if you anticipate needing a loan in the future.

  1. Explore Secured Loans

If you still face challenges finding a guarantor and the above options are not suitable, consider a secured loan. Secured loans require collateral, which can be used as security for the loan. Examples include:

  • Logbook Loans: You can borrow money by using your vehicle’s logbook as collateral. The SACCO will hold the logbook until the loan is repaid.
  • Other Collateral: Depending on your SACCO’s policies, you might be able to use other assets such as title deeds, equipment, share certificates, or life insurance as collateral.
  1. Change SACCOs

If finding a guarantor remains a challenge and other options have not worked, it may be worth exploring other SACCOs. Some SACCOs might have more flexible requirements or different loan products that better suit your needs.

 

Andrew Walyaula
Author: Andrew Walyaula

Andrew Walyaula is a seasoned multimedia journalist. waliaulaandrew0@gmail.com

Andrew Walyaula

About Author

Andrew Walyaula is a seasoned multimedia journalist. waliaulaandrew0@gmail.com

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