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Best intrest rates - need like 1.5m
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freiks
#21 Posted : Wednesday, March 25, 2015 10:05:42 AM
Rank: Veteran

Joined: 6/8/2010
Posts: 1,734
Na hii metropolitan sacco inaweza kweli
Life is an endless adventure
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nakujua
#22 Posted : Wednesday, March 25, 2015 10:54:31 AM
Rank: Elder

Joined: 12/17/2009
Posts: 3,583
Location: Kenya
Boris Boyka wrote:
mawinder wrote:
nakujua wrote:
Boris Boyka wrote:
Lets take two ppl who commit 22k for 5years tuone.
1. A. takes 900k loan from commercial bank @16% p.a for 5years paying 22k monthly. at end of 5yrs
Total paid = 1320
Total gained = 900
Diff = -420k
2. B saves 22k in a sacco for 1yr= 264k. He takes a loan of 792k (3times shares) @12% p.a for 48 months pays 21 k monthly na ile 1k as shares to sacco. At end of five years
Total paid = 1008
Total earned ( 792+264+48) = 1104
Diff = - 4
NB:
Add on Dvdndns yearly compounded for the sacco guy.

Is there a way to factor in that year the person in the sacco takes to raise that amount, compared to the bank loan where the individual gets the same almost instantly.

I think for a home improvement or a loan for personal use the sacco will do, but for a money generating project the one year might be too costly.

Plus what happens to the shares, considering that saccos have unlimited shares for members - won't one have to sell them at a lower rate.

His calculation is not practical as you still contribute to the Sacco shares even after taking the loan at the same rate and not 1k as he puts it.Take the share contributions and add to the loan repayment for the bank loan and see that banks are cheaper

@nakujua as it was said up there in the first year or so months (short term) benefits are few but subsequently benefits come in full force. Now the two are at Year 6 with A having around 345k ( dvdnd @ 7.5% p.a compounded) he can access a loan of 1,035,000 @ 12% p.a compare to B now taking same 1,035,000 @ 18% p.a as confirmed avg loan rate hapo juu.If you take other saccos like mwalimu who have been giving over 10% dvdns over the years (higher than some stocks returns,insurance policies & most MMF's) you are better of putting you cash in the sacco and guarantee safety plus avg 8% returns annually. Make the calculations again with 10% returns in dvdnd and 18% for bank loan...ata kama utaongeza inflation and time value of money.....sacco guy is better mid to long term. Hope you read on when leaving a sacco what goes on...You don't have to sell @ premium unless uko na haraka saana.when you want to leave the sacco You apply and get all your deposits after like 60 days ,share capital ndio you transfer or retain which is like 5k only.
@Mawinder am sorry to say you must be ignorant ! what do you mean by practical? I have taken loans in both , i have friends and colleagues who have taken in both cases, i have sat down with brochures and made calculations concerning loans thus am talking from practical point of view. Also that 1k was a good example. what was key that huoni is that the two MUST be commiting same amount so that calculating the benefits we say they put in (invested) same amount. You can even change so that he uses 19 k on loan and 3k as shares(loan amount reduces but money at sacco increases) so long as total = 22k
I even talked of a plan of joining two saccos to enable you get a much bigger loan so that approval and guarantors won't be difficult! I say again take your time go do the maths...don't shy off ati sacco' ni za umaskini.
NB
By shares i mean total of share capital and deposits. but in the sacco threads utaona the differences

Hapo sawa, lakini kwa calculation yako, shouldn't the 264 k initial amount that you accumulate in one year should be deducted from the gains, since you can not access that cash during the duration of the loan, same also goes for the 48k shares amount.
Now factor in the cost of the 12 months (time) needed to accumulate the cash - the bank loan might turn out to be cheaper for some.
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Boris Boyka
#23 Posted : Wednesday, March 25, 2015 4:33:06 PM
Rank: Veteran

Joined: 11/15/2013
Posts: 1,977
Location: Here
d'oh! @nakujua haven't i elaborated thatSad
To know the total gains/possesions/balance we pose a question to the two at end of 5yrs that ehat do you have? Dont bother investment.
A will say i have 900k from the loan only.
B will say i have 792k from loan and 312k in sacco (264 in yr 1 & 48k in yrs 2-5) total 1104k. calculate the diff. Further
A would have paid 420k to bank in interes
B will have paid 216k to sacco in interest
The diff
A will have no dvdns accrued
B will have dvdnds accrued about 35k
the difff
Now compute your 1yr time value na utuambie who's better. Rem also long term now at Yr 6 onwards B continues accruing dvdnds when A is crying in toilet.
Everybody STEALS, a THIEF is one who's CAUGHT stealing something of LITTLE VALUE. !!!
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jomari78
#24 Posted : Wednesday, March 25, 2015 11:52:47 PM
Rank: New-farer

Joined: 11/24/2013
Posts: 14
Sacco loans are superior to bank loans in many respects, particularly being that we as shareholders are involved in all aspects of decision making, including deciding the interest charged on loans & dividends paid, and being that most Saccos give loans from their cheap share deposits, the interest rates on loans are basically cast in stone. I'm yet to heard of a case where a Sacco has increased interest rates on loans in the middle of repayment as banks often do. In as far as guarantors go, I formed a clique of six level headed colleagues who would guarantee my loans at a drop of a hat as I would guarantee theirs. Lengthy turn around depends on the Sacco, mine takes just takes two days to have the cheque deposited in my account.

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nakujua
#25 Posted : Thursday, March 26, 2015 1:13:14 PM
Rank: Elder

Joined: 12/17/2009
Posts: 3,583
Location: Kenya
Boris Boyka wrote:
d'oh! @nakujua haven't i elaborated thatSad
To know the total gains/possesions/balance we pose a question to the two at end of 5yrs that ehat do you have? Dont bother investment.
A will say i have 900k from the loan only.
B will say i have 792k from loan and 312k in sacco (264 in yr 1 & 48k in yrs 2-5) total 1104k. calculate the diff. Further
A would have paid 420k to bank in interes
B will have paid 216k to sacco in interest
The diff
A will have no dvdns accrued
B will have dvdnds accrued about 35k
the difff
Now compute your 1yr time value na utuambie who's better. Rem also long term now at Yr 6 onwards B continues accruing dvdnds when A is crying in toilet.

smile pole, I am those students who don't get any concept in class and ends up frustrating the teacher.
My reasoning is financially crude, never paid much attention to those business classes - usikasirike sana.

If you are strictly looking at figures at the end of the 5 years then the sacco is better, the best actually would be to save the 22k per month under the mattress for 5 years.
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Boris Boyka
#26 Posted : Thursday, March 26, 2015 2:00:42 PM
Rank: Veteran

Joined: 11/15/2013
Posts: 1,977
Location: Here
nakujua wrote:
Boris Boyka wrote:
d'oh! @nakujua haven't i elaborated thatSad
To know the total gains/possesions/balance we pose a question to the two at end of 5yrs that ehat do you have? Dont bother investment.
A will say i have 900k from the loan only.
B will say i have 792k from loan and 312k in sacco (264 in yr 1 & 48k in yrs 2-5) total 1104k. calculate the diff. Further
A would have paid 420k to bank in interes
B will have paid 216k to sacco in interest
The diff
A will have no dvdns accrued
B will have dvdnds accrued about 35k
the difff
Now compute your 1yr time value na utuambie who's better. Rem also long term now at Yr 6 onwards B continues accruing dvdnds when A is crying in toilet.

smile pole, I am those students who don't get any concept in class and ends up frustrating the teacher.
My reasoning is financially crude, never paid much attention to those business classes - usikasirike sana.

If you are strictly looking at figures at the end of the 5 years then the sacco is better, the best actually would be to save the 22k per month under the mattress for 5 years.

Laughing out loudly Laughing out loudly Laughing out loudly Laughing out loudly sijakasirika...Matress bank ni Pray
Everybody STEALS, a THIEF is one who's CAUGHT stealing something of LITTLE VALUE. !!!
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githundi
#27 Posted : Saturday, March 28, 2015 3:32:15 PM
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Joined: 11/19/2010
Posts: 1,308
Location: nairobi metropolitan
You guys are ignoring the issue of time, security of your money when you guarantee others..and the fact that you have to tie your money to get money. .
If you get the right bank. .bank loan anytime
Democracy does not belong to the dead
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Boris Boyka
#28 Posted : Saturday, March 28, 2015 4:41:51 PM
Rank: Veteran

Joined: 11/15/2013
Posts: 1,977
Location: Here
githundi wrote:
You guys are ignoring the issue of time, security of your money when you guarantee others..and the fact that you have to tie your money to get money. .
If you get the right bank. .bank loan anytime

You read hurriedly! You comments shows gaps in understanding. smile Do you fear doing calculations?
I said do the time factor and prove. Memory lapse...We talked of short term,mid term & long term which are you talking of? Let me help you.
Another scenario: They both invest the loan money earning 20% intrest annually compounded.
A invests the 900k for all 5 years,B invests the 792k for 4 years while the other sacco shares earn 8% p.a
A 900k x (1.2)^5 = 2240k
B 792k x (1.2)^4 = 1643k
Cash in sacco
A. = 0000
B. = 312k
Dividends 8% p.a compounded
A. = 000
B = 135k
Interest paid to bank/sacco on loan
A @ 18% p.a. = 471k
B @ 12% p.a = 216k
Networth at end of 5years.
A (2240+0+0)- 471 = 1769
B (1643+312+135)- 216 = 1874.
My friend which is higher?
At year six onwards A won't have time advantage now....they will take same loan amount at same time.. While B enjoys dvdnd A won't have any.
Guaranteeing is Mutual because you guarantee me i guarantee you. @Githundi Come back again with something concrete.
Everybody STEALS, a THIEF is one who's CAUGHT stealing something of LITTLE VALUE. !!!
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  | | Edit by user: Saturday, March 28, 2015 4:44 PM | Reason: Not specified
nakujua
#29 Posted : Saturday, March 28, 2015 8:04:43 PM
Rank: Elder

Joined: 12/17/2009
Posts: 3,583
Location: Kenya
Boris Boyka wrote:
githundi wrote:
You guys are ignoring the issue of time, security of your money when you guarantee others..and the fact that you have to tie your money to get money. .
If you get the right bank. .bank loan anytime

You read hurriedly! You comments shows gaps in understanding. smile Do you fear doing calculations?
I said do the time factor and prove. Memory lapse...We talked of short term,mid term & long term which are you talking of? Let me help you.
Another scenario: They both invest the loan money earning 20% intrest annually compounded.
A invests the 900k for all 5 years,B invests the 792k for 4 years while the other sacco shares earn 8% p.a
A 900k x (1.2)^5 = 2240k
B 792k x (1.2)^4 = 1643k
Cash in sacco
A. = 0000
B. = 312k
Dividends 8% p.a compounded
A. = 000
B = 135k
Interest paid to bank/sacco on loan
A @ 18% p.a. = 471k
B @ 12% p.a = 216k
Networth at end of 5years.
A (2240+0+0)- 471 = 1769
B (1643+312+135)- 216 = 1874.
My friend which is higher?
At year six onwards A won't have time advantage now....they will take same loan amount at same time.. While B enjoys dvdnd A won't have any.
Guaranteeing is Mutual because you guarantee me i guarantee you. @Githundi Come back again with something concrete.

let me try out some biased maths the same.
20k monthly payment = min 60k monthly salary
12 x 60 = 720k per year (your min annual worth)

1874 - 1769 = 105k

720k > 105k smile

But on a serious note, your example is too expensive when you factor in the one year time period.
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  | | Edit by user: Saturday, March 28, 2015 8:14 PM | Reason: Not specified
nakujua
#30 Posted : Saturday, March 28, 2015 8:12:58 PM
Rank: Elder

Joined: 12/17/2009
Posts: 3,583
Location: Kenya
githundi wrote:
You guys are ignoring the issue of time, security of your money when you guarantee others..and the fact that you have to tie your money to get money. .
If you get the right bank. .bank loan anytime

I think both serve different purposes and categories of people - most employed guys would prefer a Sacco loan, while most guys especially those trying to grow their biasharas would prefer a good relationship with a bank.
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