MKOPO KWA WOTE - KCB

Why loans?
Loans are important for the development of our country’s economy:

Individuals borrow loans for life enhancement purposes i.e. Investments that are income generating and that will improve/increase levels of income (e.g. borrowing a construction loan to construct rental houses.) When the public’s source of income increase it has a ripple effect to the country’s economy
Individuals also borrow loans to enable them further their studies. An economy that has high literacy level performs better than the economy where the illiteracy levels are high.
Therefore loans play an important role in the development of our country’s economy.
Loan facilitates faster access to our goals that otherwise would have taken a long time to be realized e.g. Owning a home.
Loans enable us to attend to emergencies e.g. medical emergencies when one has not money.

What can loans do for you?
 
Loans improve/enhance livelihood in the following ways:
Open/ expand business: Successful business persons have utilized loans to open new businesses and expand existing businesses.
Asset acquisition (Land, machinery, house etc): Individuals have successfully bought land, machinery and houses through loans
Pay school fees: Loans have enabled individuals further their education and in turn develop their careers. People have also taken loans to pay for their children’s school fees.
Pay medical bill: Loans have enabled people get medical treatment for themselves or their loved ones.
Household consumables: Loans have enabled individuals buy household consumables.
Pay bills: Individuals have utilized loans to pay bills e.g. rent when they are going through difficult financial times
Personal development: Loans have enabled individuals further their education and in turn develop their careers
Leisure: People have taken loans to enable them take their loved ones for holiday e.g. during the festive seasons. This is an easier option for them as they may not have been able to afford the money in lump some and taking a loan will enable them pay for the holiday in affordable installments and flexible repayment period.

Why do we fear loans?
Myths around loans: People fear applying for loans because of myths they have hard e.g. Loans are too expensive, Loans are only for the rich, and many more myths. However these myths are not the reality as any one can with a steady source of income from Kshs. 3,000 can apply for a KCB loan.
Loss of repayment ability: People fear taking loans because they are unsure of what will happen in case of loss of the repayment ability e.g. Loss of employment. However we encourage applicants to get as much information from the personal bankers to erase unnecessary fears. When one losses there job or repayment ability ones should initiate discussions with their branch to enable them reach an amicable conclusion on how to m the situation.

How to shop for a loan: How to identify a loan that suits your need and borrow wisely
Before borrowing a loan, one should approach a bank explain their need to a personal banker and understand the specific loan that will suit their need. E.g. Mortgage, Business Loan, or Personal loan
Key points to note include the following:
Avoid expensive loans

It is advisable not to give into informal money lenders “Shylocks”, because of the urgency of a certain situation. This is because of the following reasons:
The informal money lender often operate illegally
The informal money lenders repayment periods are often very short.
The informal money lenders interest rates are often quiet high.
Due to the short repayment periods and high interest rates the informal money lenders loans are often very expensive.
Compare interest rates for different types of loans and banks

It is advisable to compare interest rates for different types of loans and banks for the following reasons:
Banks have different interest rates for different kinds of products and it is therefore imperative that when an individual decides to take a loan, they should compare different offerings from different banks.
More often than not by comparing the interest rates, these individuals who intend to borrow will realize that interest rates are vary significantly from bank to bank thus enabling the individuals to save money or qualify to borrow higher amounts.
Individuals in employment should confirm whether their employer is on a check off agreement with any lending institution. Check off loans tend to be cheaper than most loans.
Assess the repayment amount and personal repayment ability

Individuals seeking to borrow loans should assess the loan repayment amounts for the loans they have identified and have decided to borrow against their repayment ability which is highly dependent on their cost of living. This is because of the following reasons:
To avoid straining oneself and getting stress related illness as one is unable to manage their other expenses other than the loan repayments.
To avoid sudden or extreme change of lifestyle as one is unable to maintain the same standard of living due to the monthly repayments.
To avoid situations where one is forced to start borrowing from family members and informal money lenders as they are unable to cope with both the monthly repayment of the loans and their family’s needs or requirements.
Assess the loan processing turn around times

Individuals intending to borrow should assess the lending institutions turn around times for the following reasons:
The individual’s reason for borrowing maybe time bound e.g. LPO financing, Medical Emergency or even buying a property and therefore if the loan delays it will be of no use to them.
The longer the turn around time the more anxious the individual will be. Delay of responses may close out other opportunities for the borrower.
Assess the loan application procedure
Some lending institutions may have long complicated procedure for borrowing loans which are time wasting and are especially dangerous for time bound needs. This will place the borrower in a situation where they experience anxiety.
On the other hand other lending institutions have straight forward lending procedures, short, precise and customer friendly.

How to successfully apply for a loan: How to ensure your loan is processed with ease and speed.
A loan applicant should ensure that they get a Loan application checklist from the lending bank, to enable the applicant prepare all the documentations required for ease and speed of processing the loan application.
One should have already confirmed his/her reasons for getting a loan and have dealt with all fears associated with getting a loan.
One should have identified the loan that suits their needs.
One should have shopped for the right lending institution.
One should ensure that they receive a checklist from the lending institution to enable them prepare all the documentations required for ease and speed of processing the loan application.
A loan applicant should also ensure that the certification of his/her documents has been finalized.
When one is taking a secured loan one should ensure that the security (guarantors) is in order.

How to manage loan repayments: It is important for Individuals to know how to manage their loan repayments as indicated below:
Incase of loss of income one should advise the bank immediately and the bank official will guide on restructuring of the loan repayment.
The loan applicant should ensure that repayments are done on time
The individual borrowing has the option of a standing order
The individual borrowing has the option of direct credits from employer
Incase of loss of life the insurance will pay off the loan.
Loan top-up: When is one eligible for a loan top up?
Having successfully paid off a loan for certain duration of time, one is eligible for a top-up depending on their repayment ability.
When one has a margin available on their pay slip e.g. the initial loan did not exhaust the pay slip
When one gets an extra source of income e.g. rental income etc
When one gets promoted and the salary enhanced
When one can transfers his/her loan to a lending institution with a lower interest rate the margin will allow them to top up the loan.

How to make loans work for you: Ensure that you have thought through the entire project from beginning to the end to enable you know the amount of money to borrow.

Transfer of loans from one bank to another
Banks often allow for transfer of loans from one bank to another to enable an individual manages their loan better or consolidate the loans.
Change of interest rates (More attractive product)
Employer relations with the bank