What to Do If You Can't Find Guarantors for Your Sacco Loan

A Sacco usually serves two functions: saving and credit. Many people join Saccos so they can access credit easily. Compared to traditional financial institutions such as banks, Saccos are member-friendly. They give out loans at simpler, friendlier conditions and lower interest.

Another great advantage of Sacco loans is that you can take a loan without offering up collateral. All you need is a guarantor(s). This is a fantastic option, especially for individuals who are building their financial muscle and do not yet have assets they can borrow against. All they need is a guarantor. However, what can you do when you cannot find a guarantor? 

Take a Check-off Loan

If you cannot find a guarantor in the Sacco you are in now and need a loan, consider taking a check-off loan.

A check-off loan is a loan that a lender can advance you and deduct the agreed monthly payment from your salary. Check-off loans are offered to salaried employees. 

Once you apply for a check-off loan, your lender will assess your eligibility for the amount you are applying for. The eligibility will depend on your salary since the monthly installments will be deducted directly. Once they find you are eligible, you agree on a payment period and the monthly installments that will be deducted.

This means the money to pay the check-off loan will be deducted before your salary hits your account. The employer deducts the money before depositing your salary and forwards it to the lender.

A check-oof loan is a reasonable consideration since it allows you a lot of convenience when paying back the loan. The money is deducted beforehand; therefore, you do not have to worry about missing payments or making manual installments at the end of every month. 

Secondly, you get the friendly terms and conditions in the Sacco and a better interest rate since the lender is secure that you can pay back the money. Furthermore, you get to negotiate the pay period and installments.

Borrow Against Your Savings

Another option would be to borrow against your savings. This works for everybody, whether salaried or not. 

To take advantage of this option, you need to be a member of the Sacco and have saved with them. Sometimes, the amount of money you need is less or equal to the amount you saved in the Sacco. 

If this is the case, then you can borrow against your savings. In this case, you will not need a guarantor because if you default, the bank will only take your savings and clear the loan.

Borrowing against your savings is a good idea because you get to keep the benefits of having saved with the Sacco, such as interest on savings and dividends. Your savings are the security of your loan.

Recruit Friends and Family

Before joining a Sacco, you should ensure that you have people close to you within the Sacco. These people will likely guarantee you when you need a loan.

However, sometimes you might join a Sacco just to save and earn interest and dividends, but life happens, and you realise that the best place to access a loan is from your Sacco.

You can recruit family and friends if you need a guarantor in the Sacco. Given some time, they can save a significant amount of money where they, individually or as a collective, can guarantee the loan you want to take.

This option might not be the fastest way to secure a loan, but if you foresee the need for a loan ahead of time, you can make such arrangements to ensure you are catered to.

This becomes a win for you and your family and friends as you get the loan you want. Your family and friends get to join a Sacco if they had not or get to switch to your Sacco, which, if you had joined for savings and earnings reasons, we can assume it offers decent returns, which your family and friends too will get to enjoy.

Take a Secured Loan

If you still need help finding a guarantor and none of the options above work for you, you can take a secured loan. 

A secured loan is a loan that you have to put up collateral for. The lender will use the collateral as security; hence, it is a secured loan.

A good example of a secured loan is a logbook loan. A logbook loan is a loan that you take against your car. Therefore, you submit your logbook to the lender, and they take hold of it until you finish paying off your loan. 

Different Saccos offer different secured loan products. Check in with your Sacco to find which assets they can accept as collateral for a loan.

Some assets that can be used to secure loans include title deeds, logbooks, share certificates, equipment, and life insurance.

Change Saccos

When finding a guarantor in the Sacco you are in becomes problematic, and out of options, it may be time to change it.

The first consideration would be to change to a Sacco where your family and friends are. Joining your family and friends will unlock the hurdle of guarantors, as they can guarantee you in the new Sacco.

Secondly, you can move to a Sacco with various loan products that do not restrict you to taking only loans. You need guarantors. The more varied the products are, the better the odds of finding a loan product that works for you.

Consider Other Loan Options

Do not be stuck on guaranteed loans. There are many other types of loans you can take. These options do not have to be limited to the Sacco. 

You can consider other institutions, such as microfinance institutions, banks, family and friends, that can afford the loan you need. 

How Sacco Loans Work

In general, Saccos not only offer guaranteed loans, but they also offer many other types of loans, including, 

• Personal Loans
• Business Loans 
• Emergency Loans
• Asset Financing
• Agricultural Loans
• Education Loans
• Group Loans

Here is a brief explanation of how Sacco loans work.

Loan Application

Access to a Sacco loan starts at the application level. You have to fill in the application first. This application typically includes information about the purpose of the loan, the amount requested, and the member's ability to repay.

Loan Approval

The second step is the loan approval. Factors such as the member's savings history, creditworthiness, and the purpose of the loan are considered to decide whether you qualify for the applied loan. 

Collateral or Guarantees 

Depending on Sacco's policies, loans may require collateral or guarantors. Collateral could be in the form of assets, and guarantors may involve a co-signer or a pledge from another member.

Wrapping Up

In a nutshell, a lack of guarantors should not curtail you from accessing the financing you need. You can consider plenty of other options within the Sacco and without.