Co-op Bank relaxes loan terms in deal with automaker Isuzu

Co-operative Bank of Kenya has relaxed the terms of asset financing deal with Isuzu East Africa by extending the repayment period by a year and allowing customers up to Sh2 million working capital loans.

The lender and Isuzu Wednesday announced the improved deal which now takes the partnership to over 11 years since the two entities struck the first deal in 2013.

Read: Isuzu, Co-op Bank target SMEs with vehicle loans

The new asset finance scheme will now cover schools and businesses that desire to own buses and commercial vehicles. Schools will enjoy 100 percent financing, while businesses will access 95 percent financing from Co-op.

Under the new deal, the repayment period has been extended from 60 months to 72 months, allowing a breather to businesses grappling with increased loan servicing costs and reduced cash flows.

The deal covers Isuzu N-series, Isuzu F-series and Isuzu Pickups TFS and TFR Series.

Customers buying commercial vehicles will enjoy a 60-day grace period. Schools will have a one-term moratorium when they purchase the buses, with repayment extended to 72 months on a termly basis, which adds up to 18 terms at zero processing fee.

Co-op Bank managing director Gideon Muriuki said the grace period, the extended period for servicing the loan and the option for a working capital loan will assist educational institutions and businesses acquire the critical assets they require within their current financing abilities.

“We have observed that a good number of our business customers are giving priority to financing their stocks and operations. We have therefore made available an additional digital credit of up to Sh1 million for micro small and medium-sized enterprises customers and Sh2 million to schools over and above the 95 percent and 100 percent asset financing,” said Mr Muriuki.

Insurance cover

The deal will also see CIC Insurance provide cover at an average of four percent of vehicle value for commercial vehicles and 3.5 percent for school buses.

Isuzu East Africa managing director Rita Kavashe said the new financing arrangement would support customers to navigate the “challenging economic times, where interest rates are generally above 20 percent per year.

“The financing options cover all Isuzu vehicle models. About 95 percent of the products we sell, including commercial trucks and buses, require financing. So if you don’t have strong financing institutions, it becomes very difficult to scale. This deal gives us room to continue to grow,” said Ms Kavashe.

The current operating environment where interest rates have been rising has affected the ability of many schools and businesses to secure necessary cash deposits for asset purchases, thereby limiting their ability to initiate or expand investments in critical assets.

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