During this month’s Chase Debate (26th June 2014), we were discussing the topic “Understanding Retail Credit. How and when to capitalize on it.” This was inline with Kenya Bankers Authority’s theme of the month, “Credit Demand and Accessibility.” Retail Credit is a financing method which provides loan services to individual consumers. Retail credit facilities lend funds to consumers wishing to purchase high ticket items and services but are short on capital. This is a concept of advancing credit to individuals with a specific design on how the loans/credit will be monitored and recovered.
With an increase in demand, there’s a need for well-designed retail credit facilities in order to finance people’s needs, desires and lifestyles. Different banks have different retail credit facilities, requirements and rates, therefore it is important as a consumer to be aware what your bank has to offer. This is so that you’re able to take advantage of the offering to improve your individual financial position.
Knowing when and how to capitalize on retail credit is important, especially if you are upward and mobile because then if well executed, you’re able to grow yourself and achieve things you could have otherwise taken longer to achieve with your normal cash flow or that your normal cash flow wouldn’t have sufficed. Retail credit operates on the principle of the client being able to manage their finances and pay the loan facility on time.
When reaching out to a bank to borrow a loan, it’s important to find out what the bank requires from you during the application period, the turn around time, the rates of the loan, the payment duration, your point of contact should you have any concerns and whether there’s room for negotiation in the the event of an unexpected occurrence and so on. Below are some retail credit snippets from our Credit Facilities Department.
Some of the credit facilities Chase Bank available to retail customers include;
What are the main requirements during application for a loan?
Depending on the credit facility taken, there’s are some minimum documentary requirements from which applications can be appraised centrally. In case of need for further information, the Relationship Manager visits the client premises or advises the client to visit our offices.
What are the stages involved?
Once the loan application is lodged, the branch staff appraise application on intranet via Credit Quest. The credit approval staff make a decision on the approval, deferral or decline of the loan application. The credit administration then prepare and issue relevant loan letter of offer and ensures that the client has executed all documents as appropriate.
If necessary during collateralization, the Legal Department carries out this process. The credit administration the disburse the loan and the client is required to make monthly installment payments or as scheduled. The turn around time for feedback (approval, deferral or decline ), depends on product and customer segment. Please note that, these rates provided are the average indicative rates. Each application is however unique and the rate can vary, so these are in no way fixed. Same can be negotiated downwards or raised depending on individual customer risk profile.
|SERVICE TYPE (CREDIT ANALYSIS)||Response time (with/without comments)||Average Rates|
|PERSONAL LOANS CREDIT APPLICATIONS||TAT of 24 hours||20% (Reducing Balance Rate)|
|SME CREDIT APPLICATIONS||TAT of 32 hours||20% (Reducing Balance Rate)|
|CORPORATE CREDIT APPLICATIONS||TAT of 72 Hours||18% (Reducing Balance Rate)|
|ASSET FINANCE||TAT of 24 Hours||10.5% (Flat Rate)|
|EARLY DRAW DOWNSUpon confirmation of security perfection position||TAT of 48 Hours||n/a|
What are some of the reasons why one’s loan application can be declined?
What are some of the implications of defaulting on a loan?
In case you missed the online conversation on Chase Debate, you can check it out here.