TSC Important Update On Teachers’ Check-off Loans
For Kenyans who are salaried, such as teachers and other civil servants hired by the Teachers Service Commission (TSC), a tick off loan is a type of loan.
The loan must be repaid in equal monthly payments withheld from your paycheck. After that, payments are made to your bank (by cheque) to lower your loan balance.
Teachers who have gotten a bank loan from one of the regional financial institutions, including Equity, KCB Bank, Co-operative Bank, or Barclays Bank, should be aware of some important facts.
Teachers who have used a check-off facility (a loan where the company deducts money from employees’ paychecks and sends it to the bank) need to be extremely cautious when it comes to loan repayment.
Also Read: TSC Issues Directive Concerning Teachers’ Payslip
In fact, it’s possible that this loan will end up costing three times as much in the long term.
Important Information
Take note that the bank divides the monthly cheque off loan deduction amount in half.
The bank’s interest is thus partially offset by this deduction, with a smaller share going towards paying down your principal.
For instance, if your monthly loan payment is Sh20,000, the bank will clear your loan in the manner shown below.
The remaining sum (Sh8,000) will be utilised to pay off the principal amount once the KSh12,000 has been used to pay off the bank’s interest.
Those who took out the loan should be aware that as time moves closer to the end of your loan repayment period, the interest amount deduction gradually lowers while the principal amount deduction grows.
The length of the payback period affects the amount of interest that must be paid on the loan.
It’s important to keep in mind that the longer the payback time for a check-off loan, the more interest you will pay the bank.
Check the box next to Loan restructuring and potential effects.
The cheque off loan is challenging, in contrast to the secured loan facility (where you personally deposit the monthly installments).
At the end of the payback time, one may believe they have paid off their loan balance, only to be shocked when the bank continues to make demands.
If your employer (for example, TSC) doesn’t send the monthly loan deductions, the bank will accrue penalties that you would have to pay dearly.
How to stay out of jail if you overpay
Making routine calls or visits to your bank for enquiries is crucial to ensuring that your loan facility is operating without any problems. This is the most reliable approach to do so.
By looking at your monthly deductions on your payslip, you may also keep an eye on your lending facility.
TSC Important Update On Teachers’ Check-off Loans
