Advantages of taking a loan from a SACCO over a Bank in Kenya


There are several advantages and benefits of taking a loan from a SACCO in Kenya over bank loans. Many of my friends have taken loans from banks and are regretting. If you are self-employed or a businessman, SACCO loans are the best and here is why.

  1. Flexible payment terms

SACCOs are sometimes lenient on payment terms because the management have strong attachment and knowledge of the loanees. You find that an individual who is taking a loan knows everybody in the management, which makes it easier for him to negotiate payment terms. For banks, they are only interested to get their money bank for a limited time possible. If you fail to pay, they will even auction your property.

  1. Easy to get guarantors

People who join a particular SACCO are individuals from same organization. For instance, STIMA SACCO has majority of members from KPLC and the energy sector. If you’re from the energy sector, finding a guarantor for a loan is easy.

  1. Easy to get a loan

Compared to banks, SACCO loans are easily accessible. Banks will demand for payslip and several other documents before your loan is approved, but when it comes to SACCOS, you only need to show your payslip or contributions. Even if you aren’t employed, you can get a loan from a SACCO.

  1. Additional benefits

One thing I like about SACCOs is that they go ahead and buy real assets for members. These are benefits you can’t get from a bank. Most SACCOs I know purchase land, subdivide it and sell to members at a cheaper prices. If you aren’t a member of that SACCO, you’ll buy the land much expensive than members. SACCOs even go ahead to build houses for members.

  1. Dividends

Most banks don’t appreciate their members, their main agenda is to maximize profits—in fact, depositors don’t feel as part of the bank—they are strangers even if they are depositors. But when it comes to SACCOS, one benefits from annual dividends. They can even use the dividends to apply for loans.

  1. Low interest rates

At any given time, interest rates for SACCOS are lower than those of banks. The most interesting thing is that they don’t change more often.

  1. No interest rate variation

One thing I hate most about bank loans is that their interest rates change so often.You might take a loan with an interest rate of 14 but after one year,it increases to 21.My friend, you can pay a loan of Ksh1 million in 30 years.