SACCO is an abbreviation which stands for Savings and Credit Cooperative Organizations. Those people who may have common bond are the ones that own,manage and at the same time govern the SACCOs. These people may include : People working for the same employer, belong to the same church, work in the same community and even labor unions.
SACCOs have an application which helps to keep records of members’ deposits, withdraws, loans and savings and to an extent of managing members register which is called Sacco Management System.
There are many people out there who may not know how SACCOs operates and they don’t even know the rules which may govern most of the SACCOs. These are the same people who sometimes get disappointed when they fail to secure loans especially where they can’t sweet talk members and mobilise them to act as guarantors or sometimes the restriction on direct withdrawal from their savings.
If you fall among those people then don’t worry because am going to highlight in this article some of the factors and even conditions that you should consider before joining any SACCO. These factors include:
1.Before saving you first register
Before you start saving, you must subscribe for membership just like any other commercial bank where you can only be allowed to save after you’ve registered or even opened an account.
Each SACCO has got its minimum capital share like now Gusii Mwalimu SACCO is Kshs. 2000 which should be contributed monthly and you can only start saving after you register and become member.
If you want to leave any SACCO you can transfer the shares to anybody you wish to therefore its advisable to look for person to transfer your shares once you want to go exit.
2.Your savings and contributions must be regular.
SACCOs are not like commercial banks where you can save your money whenever you have or you wish to. In SACCOs the monthly savings and contributions must be regular and maintained throughout the period of membership without defaulting.
3. Defaulting leads to termination of membership
When you are unable to pay your monthly contributions hence you default this may lead to the termination of your membership. Its therefore advisable to ascertain your monthly income so that you can decide the amount to be deducted monthly to avoid being a defaulter.
4. Before you go for a loan you must save
When saving is like you depositing to the SACCO and when you want to access that deposit is like borrowing. Therefore your monthly contributions Constitutes your deposits its through these deposits you will be allowed to go for a loan . once you’ve saved your money in the SACCO, you can only access that money by taking a loan or terminate your membership.
5.Minimum limit of contributions
As a member you have a choice to determine the amount you should contribute monthly but remember there is a mandatory minimum monthly contributions and each SACCO has its own minimum monthly contributions. Again you can’t withdraw the savings unless with termination of membership.
The most important thing is that you can choose to contribute monthly any amount above the minimum and you can as well review your savings in that you can change the monthly contributions any time you wish to depending with the situations that prevails.
SACCOs rely on your savings and shares which constitutes the source of the capital to give out as loans. For you to qualify for a loan it should be within the amount you’ve contributed therefore as a member you should save for a period of not less than 6months for you to qualify for a loan. To some SACCOs you can only be eligible for a loan which is four times your savings.
6. Your must have guarantors when borrowing
Unlike commercial banks which insists of collaterals, SACCOs only need members to guarantee you for the loan. The sum total amount of all the guarantors shares should be same as the amount you borrowing incase you default the guarantors are the ones to bear that burden.
7.Loan repayment is quite separate from regular savings plan.
Most People think that they can stop their monthly contributions as they concentrate on repaying their loans. Of which this is not true because your regular monthly contributions as we stated earlier on is mandatory. You will be required to maintain your regular contributions and at the same time continue settling your loan repayment. Therefore its advisable to find out extra sources of source income which you can use to repay your loan as you continue to save.
N/B: Don’t go for a loan when you have nothing to do with the money because you may end up regretting the whole of your life when repaying the loan which didn’t assist you anywhere
Most importantly you should go for a loan to invest since those investments will finally help you repay the loan.
Don’t go for a loan to buy a personal car or build a house instead you can build rentals or any other investment which can generate income that’s FIRST THINGS FIRST