What do you do when your lender decides to hike your loan’s interest rate midway? How do you adjust to higher loan interest rates? Do you protest or do you default? This is the predicament that many people with personal and business loans often find themselves in.
To begin with, the business environment is not so conducive that your business income or salary will be able to accommodate sudden shocks. Nonetheless, Esther Muchemi, an entrepreneur and the chief executive officer of Samchi Group Limited, says that there are solutions you can look at to cushion yourself. She recently revealed that she held meetings with two banks over interest rates and offered a few solutions you can look at. Here’s what she said:
On average loan interest rates have gone up by minimum 10 per cent. In fact I feel that the rates applicable now were last applied in the 80s.
So if you borrowed 2 years ago, you probably are paying 30 per cent more just because the rates have changed. So this has become a personal and business risk that you must take charge and take control off.
What are some suggested solutions when faced with higher loan interest rates-;
1). Review your business and confirm it can still afford the repayment either from;
a. Increased revenue or
b. Reduced cost.
2). Talk to the bank if you still find you have an issue and find out-:
a. Could they reduce the interest rate?
b. Could they give you a moratorium (a temporary halt on loan payments, agreed upon with your bank, allowing you to avoid penalties during financial challenges)?
c. Could they reschedule to a longer repayment period?
d. Or could you get a combination of all?
Just ASK and don’t hide your head in the sand; the issue won’t go away without action. I can confirm mine, so far are listening. In fact one of them held my interest at same level. A great gesture I must say. Now that we are speaking, a win – win solution must be found.
Rhina Namsia: This is why it is hard for you to save money in an Emergency Fund
Another alternative I have seen or heard people are doing is selling some property to clear the loans, or liquidating fixed deposits and other assets to repay loans and get out of the pressure. Well, what are we saying, we definitely are in a very difficult bank loan interest season.
It calls for a lot of re- thinking. Remember, when the business environment is tough, the first and most important thing is to preserve yourself, your family and your business.
When you are preserved you give yourself the lifeline and you will bounce back when times are better. Let’s agree, as business people, we will not give up even if we are pushed to the wall.
Higher loan interest rates is one of the things I call tribulations of an entrepreneur, which can be many, but the tough ones sail through them , somehow, yes somehow.
