I have a loan of Ksh 10m with a local bank with a repayment plan of 8 years. I have requested it to be converted into a dollar loan account as my income is in this currency. Though reluctantly, the bank has promised to review my request with the following conditions.

1. The loan must be repaid within 4 years – (meaning increase my monthly repayment amount of which I wanted it reduced so that; I save some funds to flow into developing the property I used the loan to purchase)

2. It will consider an interest rate of not less /more than 11% (my current rate is over 20%, (I am OK with this!) though I understand that the US$ loan interest rate could be as low as 8%.

Wazurian’s wise advice is needed here. Are there other options available locally with contact that could support my hunt? please let me know.

Thanks.

cc @Banker

Great advise! Infact the fact that his salary is in dollars and he is investing that salary in Kenya through the loan, by default he is hedged from depreciating shilling..... I would bet on depreciating shilling against the dollar than the other way round, based on everything we can see from the world markets and Kenyan budget gap.

Jamaa went AWOL. He has a ton of questions on his to-do list, should he return.

9% is quite fair for a usd loan in kenya

All the best @Philanthropist .... keep us posted

Lady Admin call him/her.

Hallo everyone. My sincere apologies for the frequent disappearing acts. Am ussually unable to log in from any mobile device; hope admin can help.

@philanthropist, my employer is offering USD denominated loans @ 9%. If your current bank is offering 11%, the biggest question is whether it will make economic sense to cross-over. If I took up the loan, your savings in interest expense would come to approximately $5,500.

I would charge you 2.5% in processing fee ($3,000), take out life insurance for you because you are borrowing as an individual ($800), and you would bear the collateralisation costs i.e. legal fee and valuation fee ($1,200). (Stanchart had a promotion last year where they were paying the proffesional fees for the lawyer and valuer.

Should your bank decide to drag their feet as you have hinted above, this process could take as long as 6 months.

In a nutshell, the charges you would incur while crossing over would almost certainly wipe out the amount saved in interest expense.

NB : Always avoid any bank that chooses these profesionals for you. Most banks give you their panel from whom you pick your choice.

Good counsel @Banker. .... and may lady admin check on your loggin issue

.... OAN, your views are welcomed on matter under discussion in post #57 of the following NBK thread >>> http://www.wazua.co.ke/forum.as...osts&t=24365&p=3

As a matter of good practice in Wazua community, I am reporting back that I have finally convinced my bank, and they approved my currency conversion into a dollar loan and gave me a 10% interest rate from around a 20% in Ksh; however, I learned that:

1, It is not easy to transfer the loan from one bank to the other; this will cost you a fortune as@banker and the rest of Wazua's, had indicated/advised

2. When the currency conversion is done, the bank will use a higher dollar (sale) or purchase the dollars from them at a rate of 1 US$ to Ksh 87 - good reasoning but too high.

3. The loan repayment period is reduced to a shorter repayment period - from 7 to 5 years; the reason is that they can't guarantee long term dollar loan!!

My first dollar loan repayment is in August 2013 - it took more than 5 months to complete the HUNT!

Thank you all for your contribution and wealthy of knowledge in Wazua!