By Priscilla Buteera
The thought of borrowing money will occur to any one of us every once in a while. And when you are an employee with a reputable company, getting a salary loan only takes about three days. But then what happens when one loses that job before clearing the loan?
Living a loan-free life is more or less a dream, as it is not possible to always have sufficient funds. Whether you want to buy a car, pay tuition, start up a personal business or boost an already existing one, when money is not enough, people will always find means to obtain it, and borrowing is always the realisable preference.
One can borrow from relatives or friends and if employed, a salary loan would be their redeeming option. Getting it might be simple, but when you lose the job, which is the security for the loan, servicing the loan becomes a nightmare.
While a good number of people sing praises for salary-based lending, especially those whom it has benefitted, there are some who consider it dreadful. However, the worst case scenario is when one loses the job, and there are no other means to service the loan.
Jane (not real name) decries the ruthless way her former bank handled her when she lost her a job and failed to service her loan.
“I felt bitter and betrayed by the bank I had used and trusted for 10 years. As a matter of fact, I did not have any sure means of clearing the loan after losing my job. The bank did not wait for at least six months before selling off my small house and car,” Jane says bitterly.
“They did not give me time to find means of clearing the loan and I was not even given a chance to involve my lawyer. I am working again, but I will never use my former bank again, and I will never get another salary loan,” she adds.
Jane is not alone. More people have faced the wrath of banks after losing their jobs.
“I regret having acquired a salary loan, if only I had known the tragedy that lay ahead, I would not have gone for it,” says Linda Nyakato, an accountant.
She goes on to say, “I got a loan to purchase merchandise for my boutique, and all was lost in a fire. Pay day is no longer exciting for me, every month my salary goes down to almost nothing and I have no business anymore,” she says.
What banks do
There are cases where a client fails to service a salary loan and the issue is taken to court.
“Some people become stubborn and less cooperative; this is when we take the legal step of involving the court. Otherwise we always give our customers ample time to find means of clearing the loan and we agree on the instalments they can pay every month,” says a loans officer who prefers annonymity.
He adds that in some cases, they turn to insurance for compensation.
Since the employer takes part in the process of undertaking the loan, when their employee loses his or her job, some employers consider using their former employee’s benefits to pay off the loan.
“As a company, we commit ourselves to remitting monthly installments to the banks where our employees have salary loans, so when they lose their job, we have to find a way of servicing the loan. We can use their benefits.
However, if all fails we leave it to the employee and the bank,” says a human resource manager.
Seeking intervention from courts
Over all, the salary loan is one of the best bank products and the default cases are rather minimal.
“In case of harassment from the bank, the courts of law are the best option, so that the client is protected and the terms of payment are agreed upon amicably,” says a city lawyer.
Easy to get
“The salary loan is the quickest loan to get. If the client has the requirements, say letter of undertaking, latest pay-slip, and valid company identity card, among others, we give them the loan right away.
It takes about two to four days to receive this loan,” says Ronald Tugume, a bank customer information consultant.
I regret that loan
By Calvin Semukaaya
In Uganda today, one can never really get by on a salary alone. You need a side income or a loan. I opted for the latter, and I have regretted it ever since. One of the bank salespeople approached me and told me of the benefits of getting the loan.
They even told me about how exactly I would pay back, and more importantly, what would happen if I were to lose the job. I was made to understand that it was to be insured and covered by my employer.
Assured that all was well, I got the loan. I kept up my payments till I lost my job. However I was not worried because I knew I was covered. Little did I know that was far from the truth and I was going to experience my worst nightmare.
I have been constantly harassed and hounded by people claiming to be recovery agents for the bank and acting under the authority of ‘Bank of Uganda’. They have bombarded me with emails and texts to the point that I have had to go into hiding to escape them.
Furthermore, they have plastered my picture in the papers. I was misled by a sales agent. From my experience, a loan is a bad idea.