WhatsApp Flash Chat: Investments & Borrowing
We had our first Financial WhatsApp Flash chat on Investments and Borrowing and we gained a lot of insights from our Financial expert. All the questions were submitted by our Villagers and the answers have been compiled below.
Loans, Credit And Debts
What are the dos and don’ts of taking a business loan for a spouse?
If your spouse has a bad credit score, a joint loan could mean higher interest rates or you may get denied. If your spouse declares bankruptcy, you could lose community assets to pay the debt. Your best stance is to have a conversation in detail with your partner before you get married to be clear on what your financial status is.
Are there short-term loans that are given to individuals on short notice? How many days can it take?
Yes and yes! You can access short term loans from FinTechs and SACCOS which process loans within a 24-hour period.
How can a small business build credit or a loan profile?
For the most part, here are the steps to building a great loan profile:
Set up a Business Entity.
- Get a Tax ID for your business.
- Get Listed with Business Credit Bureaus
- Establish Business Credit History
- Keep up to date with your taxes.
- Maintain a Good Personal Credit Rating.
What’s the best way to build credit as an individual who hasn’t taken loans in the past? How can I build my credit?
The best way to build a credit profile for an individual is to take out and repay your loans on time. The more you borrow and repay on time, the higher your credit score with the Credit Reference Bureaus as well as any other loan App you may be using.
Without savings, can one get a loan to start a business?
Absolutely! With alternative lenders like Branch; you do not need savings to take out a loan. All you have to do is download the App, fill in your personal details, and if eligible, get a loan in under 3 hours and start building your credit!
Any Tips on Loans for Education that are under 70K?
There are a lot of e-learning platforms out there that offer exhaustive courses at cheap rates. For example, Udemy and UNICAF. In addition, institutions like KIM offer short courses at competitive prices.
Is it advisable to take a loan to buy a car?
This is only advisable if you are taking a loan to get the car as an investment for your business. ie Taxi, hearse or transport business. If not, cars area luxury, you can save up and buy one once your lifestyle can accommodate it.
What is the easiest way of staying away from debt?
Rule of thumb – make timely repayments and take out loans in the amounts that you actually need, when you need it. Then, put into consideration the repayment schedule or better yet set a reminder to make sure you don’t default on any payments.
Always make timely repayments. It’s also important to note that debts are not necessarily bad as long as you are not over leveraged.
To get out of a debt cycle; the first thing to do is to align your monthly income, if you have any, with your repayment schedule. For instance, if you take out a loan of KES 20,000, take a maximum repayment period of 3 months, and repay this partially. This will have you repaying your loan at say KES 8,000 a month in 3 installments.
I am scared of taking loans at times. How can I get over that fear? Any tips on how to not be scared to take a loan even from these mobile apps?
Credit is part and parcel of our financial lifestyle. Dependent on what you need the loan for, these are tips to manage your fear while still taking advantage of credit:
- Make timely payments.
- Pay more than your monthly Equated Monthly Instalment.
- Handle and manage your debts effectively (set reminders, know the terms, fees and follow up on hidden charges).
- Keep a check on your credit report.
- Make sure to pay the minimum instalments.
- Create a monthly bill calendar.
- Maintain an emergency fund as a backup for any defaults.
- Do a background check of the lender/institution.
What patterns do you see about women borrowers? I always hear they are better at paying back but is that true? Any other behaviours unique to women?
Women are actually better borrowers than men. However, when looking at eligibility on a borrower, gender is not one of the factors considered.
The CRB (Credit Reference Bureau)
When someone is listed under CRB and later clears with them; how long does it take to get a loan from them and does that mean that you are not legible to get a loan anymore?
Once you have cleared with CRB and your good standing is confirmed with other lenders, you are eligible for a loan.
How do I stay off CRB?
Being blacklisted by the CRB will affect your ability to borrow from other lenders. Making timely repayments with all lenders will keep you off CRB. In addition to this, ensure you repay your loans as per the schedule. Financial institutions are mandated to list a lender with the CRB 90 days past due date. Keep this in mind while servicing your loan.
How can I get clearance from CRB?
If you have defaulted your payments and are listed, try to clear the loan with your defaulter. You will have to clear your pending defaulted premiums to restore your credit score. First, make your application through a registered credit reference bureau in Kenya. For this, pick between; Metropol, iCredit Info Metropol or TransUnion. You will have to pay KES 2,200 to get the certificate.
The alternative is to get a credit report from CRB for KES 100 and present it to the lender who listed you.
If you sign a loan for someone and they don’t pay, can that land you in the CRB list?
Yes it can. If you sign off as someone’s guarantor and they default on their loans, you will be required to pay their loan on their behalf and can get listed with the CRB.
If someone is listed on CRB by HELB and is currently not in a position to remit payment due to unemployment, how can this issue be solved to help the individual get a loan from a Sacco?
This is considered on a case by case basis. If you do have arrears on a Helb facility and are in the process of servicing it, we will consider you for a loan if all the factors check out.
Investments and Education Policies
What are some of the best investments a busy person can do?
There are many investments one can invest in for the business folk out there. E-commerce is one of the businesses. It gives you the freedom to operate the business at your own convenience.
It’s also dependent on how much you are willing to invest and how much time you want to commit to that investment. A few ideas include;
- Real Estate.
- Investing in yourself (your education, your retirement plan).
- Invest in a diversified mutual fund.
- Or invest in an exchange-traded fund.
I have property and I would like to build for purposes. What are the different financing options considering that I am not in a position to give 20% of the total investment cost?
Unfortunately, with most banks, you have to give a percentage of the total investment cost. One way to avoid this is to take out facilities with alternative lenders where you do not need to cite the uses of the facilities you are taking out.
Would you advise someone to sell land and invest the money in transport business?
Dependent on the risk you want to take, it’s best to leverage on your expertise in the transport industry and return from selling the property.
What banks can I take mortgage from. I’m in my first job and I receive a humble income.
When shopping for mortgage companies, these are the factors you can use to choose.
- Level of mortgage repayments you can afford.
- Your income.
- Your debt repayments.
- Your day-to-day spending.
What is the process of getting shares in the stock market?
- Understand the trading platform.
- Be sure of the type of assets you want to trade.
- Select the best online stock trading broker.
- Open a trading account.
- Select your ideal stock NSE online stock trading.
- Choose how many shares you want to buy.
Where can one find Investment opportunities for E-commerce purposes?
When it comes to setting up an e-commerce shop, select any business idea according to your passion, skill, experience and talent. Here are a few ideas that you can explore:
- Selling Kids Toys & Games on Your Website.
- Thrift shopping and selling second hand products.
- Selling pre-made content e.g educational PDF or Power point presentations, curriculum, how-to or tutorial videos.
- Selling innovative arts and crafts items (Etsy shop).
Which is the best education policy?
When it comes to education policies and plans, there are definitely a few things to evaluate. Before taking one, consider your monthly savings, the premium waiver benefit and adequate cover.
What education policy would you advise me to take that so that by the time he joins school, he will have full cover?
I cannot point you to one specific education policy but here are some key tips to consider;
- Your monthly savings.
- Premium waiver benefit (It’s a clause in an insurance policy that says that the insurance company will not require the insured to pay a fee to maintain the policy under certain conditions. It’s the easiest way of staying away from debt)
- A cover that works for you.
Is an education policy a wise idea?
Education expenses can prove to be a big hole in your pocket. An ideal education plan would cover most, if not all, future costs of a child’s education. Having an education insurance policy for your child’s education with an adequate cover can be helpful in paying for your child’s college without having to worry about covering your other expenses.
How does a single mum on minimum wage save up for the education of her child?
Consider setting up an education plan with insurance companies. Get a policy that works with your budget. Most insurance have provisions for plans that you can contribute for as low as Sh 5,000-10,000/ month.
Is it a good idea to borrow money to Invest?
It is a great idea to take out loans for Investments. What you need to keep in mind is your ability to repay, and have a repayment plan in place for servicing the loan. In addition, do extensive research on the investments and have an alternative plan to supplement your income and repay the loan if the investments do not pan out as expected.
SACCOS and Table Banking
Does anyone know of any SACCO or Table banking opportunities?
There are many great SACCOs out there! Top of my mind is Stima Sacco and Safaricom SACCO.
Does one need to be introduced to these SACCOs by someone?
Yes. Most SACCOs need an introductory letter from prospective customers. If you know someone in the Sacco, they could introduce you to that SACCO.