Borrowing is what many of People have to experience in order to fund their Business. When you look at success stories of Most business people, they must at one time borrowed money in order to stabilize their businesses.
However borrowing must come with high level of of knowledge so as to avoid situation where Repaying become a problem. That is why today we will be comparing Bank Loans and SACCO loans.
COMPARISON BETWEEN SACCO AND BANK LOAN
1. SACCOs give Loan on reducing balance while Banks give on Straight line Basis. That means for SACCOs interest is on balance of the Loan while with Banks interest is the same until you finish repaying your Loan.
2. SACCOs are arguably more accommodating in their debt collection than banks, making them a good option during harsh economic times.
3.Repaying a SACCO loan builds your savings while Bank does not encourage Savings.
4. Banks can really give huge amounts of money compared to SACCO’s which gives loans pegged on their savings.
5. A SACCO can easily loan you money even if you leave employment, as long as you can demonstrate ability to repay. A bank will be unwilling to do same.
6. SACCO loans are easily accessible unlike Banks loans which have difficult appraisal techniques.
7. You can access SACCO loans even if you are listed in CRB but Banks cannot.
8. Banks can adjust their interest anytime due to economic fluctuations without informing lenders while SACCO’s cant.
9 Banks normally contain hidden charges charges when taking loan like insurance fee, appraisal fee, Legal fees and etc while most SACCOs don’t have this.
10. In SACCOs you have additional benefits such as dividends while in Banks there is no such.
11. In SACCOs you can have more than 2 loans running as long as there ability to repay while in Bank the only option you have is Top Up.
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