Hi,

Does anyone know exactly how Sacco loans work? This maths seems to get more complicated than I thought.

Assuming I have purchased 100K in shares,sacco constitution says that am entitled to 300k loan.

Before taking the loan,I decided to guarantee a friend of mine in the sacco 100k so that he can take a loan.

1) Is it possible for this friend of mine to also guarantee me 100k assuming he has similar amount in sacco shares?

2)I asked my sacco the maximum I can get in loans and they tell me 0(Because I have guaranteed someone else all my shares!). And that although I am entitled to 300k loan,I need to find other members to guarantee me the full 300k before I can get this loan.

This to me means that for every shilling that the sacco lends,it must be backed up by other members idle shares against which there are no outstanding loans,and the same have not been used to guarantee other members loans.

If this is how sacco's work,does it make any sense to continue being a member?

Most likely ur sacco is not employee based hence check-off is probably not possible. I belong to such a sacco that operates exactly the way u've explained. The only slight difference is that u can secure ur loan thro logbook or title-deed. In employment based saccos or others where checkoff is possible a shilling can guarantee 2 or 3 depending on risk assessment and historical default rate or scientific research.

Crocodile tears: If you can't assist me when I'm alive en you attend my funeral.

@jerry- yu said it.
In these times of high defaults,Security of the loan is foremost b4 its disbursement. However Saccos which still apply rules rigidly have no future growth

I was born intelligent,education ruined me.

@sk admin ... some time back a member had posted a detailed comparative analysis on the pros & cons of bank loans alongside sacco loans. How can I revisit the same. Please assist. Thanks.

As a man thinketh so is he

@ amauriceus

You should get your officials to explain it to you 100 times if necessary until you understand it. We might tell you so many things and our understandings and believes but eventually whatever you sign will be between yourself and your sacco. Be wise and know what you're getting into 1st hand.


Bright and interesting people talk about ideas.
Those of average intelligence talk about things.
Stupid people talk about other people.

We also need to know what happens in other saccos. You don't belong to one,do u? Are you aware that saccos are charging loan appraisal fees. Mine charges 1% which I don't think is fair.

Crocodile tears: If you can't assist me when I'm alive en you attend my funeral.

Simple,since you have used kshs 100,000/= as security for the loan of that other members,you will need your loan of 300k to be fully guaranteed by other members of the sacco only that the person whose loan you had guaranteed cannot guarantee your loan.
The future is already here!

@Mkimwa .. Thanks alot buddy. Regards.

As a man thinketh so is he

many saccos will charge a 12% interest rate p.a.

this is very attractive till you discover that around 33% of the monies is actually your savings.

my option-quit the sacco,get a third of the money you needed and source the 2/3 from da bnks.

my last beef with my sacco is the long notice period the need before they can release your cash if you applied to quit;i mean 4 months notice is too long.


pata potea

@Kingz....

This discussion has been had...

As you factor in the 33% they are holding (which means that they are actually charging 18-19% just like the bank) please factor in the fact they PAY YOU back about 8% on the amount you've contributed which the Banks don't...