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PRESENTER: SARJO A. SALLAH GTUCCU STAFF

Learn about the different types of loans, their importance, and the application procedures. Discover how loans can be used for various purposes and the role of credit worthiness, guarantors, and collaterals in the loan process.

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PRESENTER: SARJO A. SALLAH GTUCCU STAFF

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  1. LOANS PRESENTER: SARJO A. SALLAH GTUCCU STAFF

  2. WHAT IS A LOAN A loan is a debt provided by an entity (organization or individual) to another entity at an interest rate, and evidenced by a promissory note which specifies, among other things, the principal amount of money borrowed, the interest rate the lender is charging, and date of repayment.

  3. TYPES OF LOAN The types of loan GTUCCU issue include: • Regular • Special • Refinance • Consumer • Overdraft

  4. IMPORTANCE OF LOAN Human Wants and Needs! In today's society having good credit is an important aspect of being able to afford necessities such as housing, transportation and insurance. Various businesses may offer products and services based on your credit worthiness. Loans could be used for: • Family: naming, wedding, funeral ceremonies. Fashion and luxury, rent • Construction and plot buying • Education • Travel • Health

  5. CONT….. NB: Your credit score is something that will follow you throughout your life and good credit can help you obtain what you want at an affordable price.

  6. LOAN APPLICATION Documents that provide the essential financial and other information about the borrower on which the lender bases the decision to lend or not to lend carries the bulk weight of an outcome. For a business loan, it normally requires a detailed business plan that includes current and projected (usually for 3 years, or for the period of the loan) financial statement. The applicant firm must specify the loan amount and purpose, period and means of repayment, guaranties and/or collateral offered.

  7. LOAN APPLICATION The amount of loan that a member is qualified to apply as self guaranteed is 1.5 x Savings and 3 x savings if guaranteed/collateral. A new member is required to safe three consecutive months before apply a loan. However, special circumstances are reviewed by a special committee.

  8. APPLICATION PROCEDURES A member applying for a loan should follow the following procedural sequence. • Fill a loan form or tender the passbook to a teller. • Teller seeks approval from the loan officer if loan is issued. • Applicant given cash/cheque and receipt to sign. • Applicant given transaction receipt.

  9. DURATION AND INTEREST CHARGES The amount of the interest paid/charged on a loan, small or big is determined by the duration/repayment. The higher the repayment or the shorter the duration, the smaller the interest charged/paid. The repayment schedule gives the summary.

  10. SAMPLE OF A LOAN SCHEDULE

  11. ACTION POINT Where a member wishes to pay off or partially pay his/her loan, or paid the nominal interest charged on a loan, the following procedures or measures shall be taken: • Liquidation • Transfer • Write-off • Charge-off • Waivers & Rebates

  12. GUARANTORS & COLLATERALS Guarantors and collaterals influences the amount of loan a member can acquire. Only members of GTUCCU can serve as guarantors. Accepted collaterals are compound documents. Guarantor/collateral could be used to recover a loan.

  13. WHY GUARANTORS & COLLATERALS? • To secure loans; • To ease recover loans; • To protect the Union’s capital; • To reduce bad debts; • To minimize provisioning.

  14. DEFAULT Failure to pay a loan affects the Credit Union in many ways. It: • increases the provision amount • increases bad debt • reduces cash flow • reduces interest earned • affects dividend payment • reduces investments and purchasing power

  15. MODE OF REPAYMENT • Check off • Counter • Postdated cheques • Standing order

  16. CREDIT WORTHYNESS To be loan worthy, the following could be determinant factors: • Current loan balance • Guaranteed loan balance and status • Savings balance • Member’s loans record/history • Longevity • Indebtedness and ability to repay

  17. COUNSELLING NO LOAN? CLOSE MY ACCOUNT!

  18. LOAN DEDUCTIONS The following may occur in relation to loan repayment: • No/late deductions; • Continues deduction after the loan; • Deductions misposted ; and • Duplicated account

  19. LIFECYCLEMOTTO: “Good to borrow, Better to repay, best to save”.

  20. *Robert Mugabe's* WISE QUOTE "When your salary comes in time, you eat chicken. As the salary reduces you eat products of Chicken (Eggs) and subsequently you begin to eat chicken's food, (maize and millet), and finally, when salary is finished, you become chicken itself, spending your time walking around just looking for what to eat"! ...

  21. CONT… • *Think INVESTMENT*…because you won’t be young forever! • *Think INTREPRENEURSHIP…* because you wont be employed forever!

  22. THE END THANK YOU

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