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Should I let SACCO buy my Bank Loan?
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Caveman
#1 Posted : Friday, August 28, 2009 9:00:00 AM
Rank: Member


Joined: 4/15/2009
Posts: 371
Hi ALL,

I need your valued assistance.

I am servicing a bank loan of 280k at 14% interest. I find that the balance is reducing too slowly ( due to high interest). I have the option of letting my Company sacco buy the loan but will charge me 5% of the outstanding balance. The bank will aslo penalise me (5%) for early repayment. My advantage is that I will enjoy lower interest rate (12%) and smaller monthly repayments. This will leave me with more money to invest elsewhere.

Please help me before I blunder.


Men who kiss their wives in the morning live five years longer than those who don't
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wanyo
#2 Posted : Friday, August 28, 2009 10:20:00 AM
Rank: Member


Joined: 9/28/2006
Posts: 102
Supply details of how far the loan was to go,how many months you have paid and for how long you need to repay the loan with the sacco.

You never know,It might turn out its better to be fried by the Bank than being roasted by the sacco.
i too
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Caveman
#3 Posted : Friday, August 28, 2009 11:38:00 AM
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Joined: 4/15/2009
Posts: 371
I have repaid it for one year now. Its supposed to take four years

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wanyo
#4 Posted : Friday, August 28, 2009 1:16:00 PM
Rank: Member


Joined: 9/28/2006
Posts: 102
May be it will be like this excluding negociation and Insurance fees.






Principal
Kshs. 280,000


Rate
14%


Monthly repayments
Kshs. 7,651


months paid
12


Oustanding amount
Kshs. 223,872


Oustanding amount+fine(5%)
Kshs. 235,066


Term for the loan
4 Years






Sacco Rate
12%


Loan bought + 5%
Kshs. 246,819


Period to pay loan
3 Years


Monthly repayments
Kshs. 8,198










Total amount for the loan would cost
Kshs. 386,942






If were to go full loan with first lender you would have paid
Kshs. 367,268





Why bother,sweettalk your current banker to give you some breathing space






i too
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DeeKay
#5 Posted : Saturday, August 29, 2009 4:50:00 PM
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Joined: 4/22/2009
Posts: 2
Wanyo,thats impressive. Do you work with a bank/financial institution?
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wanyo
#6 Posted : Saturday, August 29, 2009 7:01:00 PM
Rank: Member


Joined: 9/28/2006
Posts: 102
On the contrary,i dont work with financial institution. Am in the enginering dormain.
With Excel and simple formulas,it is quite easy .
i too
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