How to obtain a loan in Ghana
Any act which involves giving out money, an asset or goods of which repayment (or payment) is expected to be made with an interest charge at a later date can be classified as a loan. The act of giving out money to be paid later with interest is regulated by the Bank of Ghana. The two main types of loans are secured loans and unsecured loans. Secured loans are loans backed by a collateral security and unsecured loans are those not backed by collateral. Commercial banks, microfinance companies and financial institutions recognized by the bank of Ghana are those mandated to engage in the practice of giving out loans.
Secured loans are the most common in Ghana due to a high rate of non-performing loans in the industry. Some common secured loan products available to individuals are personal loans, car loans and mortgage loans. The most common unsecured loan is bank overdrafts (except in cases where a bank requests for a collateral before granting an overdraft request). It must be noted that secured loans have a relatively lower interest rate, compared to unsecured loans, because they are backed by collateral.
To obtain a personal loan from a bank, one must have established a banking relationship with the bank for at least, 6-months. Salaried workers with a banking relationship history of more than 6-months with a particular bank stand a greater chance of getting a loan request approved. Normally, a bank will request for a collateral security and a guarantor. The type of security varies from one institution to the other and sometimes dependent on the amount required; some prefer landed properties, others prefer a movable vehicle. To make applying for a loan easier, it is important to have your monthly income sent through one account with a particular bank. This will demonstrate your ability to repay the loan as the bank will be assured of a monthly remittance for their deductions. These days, the main criteria the banks look at before approving a loan request is an applicant’s ability to repay a loan than the ability to provide a collateral security.
A very important factor to consider when applying for a loan is interest rate. Banks price loans by adding a percentage to the base rate (monetary policy rate, MPR) provided by the bank of Ghana. Currently, the MPR is 25.5% so expect the rate a bank offers to be higher. Microfinance institutions and other financial services providers authorized to offer loan products have a much higher interest rates because they offer loans to people who have no banking history or relationship with them. Some also insure their loans; the insurance is passed on to the applicant by adding it to the interest rate. Compare the timeframe within which the loan will be approved if the money is urgently needed. Banks take a much longer time compared to microfinance and financial services providers; some can give a loan in less than 24-hours, provided all requirements are met. We at GhanaCompares.com help you to compare the loans financial instituons offer.
Loans are known to help meet financial needs of both individuals and companies, providing the option to spend what is not yet earned on pressing needs. Repaying a loan can be challenging, especially those with a shorter repayment plan. One must project future cashflows to ensure repayments can be met before applying.