I am in my early 50s. I am married with two grown children. I don’t pay rent as my wife, and I have a half-acre where we live. The title is jointly owned by us. My wife works as a primary school teacher.
In January 2025, I took a loan of Sh900,000 from a micro-lender at 25 per cent to buy a second-hand pickup vehicle for a local transportation business. I topped up this money with my savings of Sh300,000 and bought the vehicle. The loan was for a period of 36 months, and my repayments were about Sh35,700.
I paid Sh500,000 in 14 months. Unfortunately, business slowed down, and I started missing monthly repayments. My lender gave me the option of being auctioned or restructuring the remaining balance plus charges and penalties. I agreed because I didn’t want to lose my source of income. They added charges and penalties of Sh120,000 to the outstanding balance of Sh788,000, then restructured the loan and gave me 48 months to clear the new balance at 22 per cent.
I have now been paying Sh28,600, but I am still struggling. Business is still bad and, in some months, I am forced to borrow from my wife, children, friends and family just to meet the repayments and avoid default penalties. If I sell the pickup today, the money I get won’t be enough to offset the loan. What should I do? Please advise me. – Vitalis
Dominic Karanja, a financial planning and investments consultant.
Handling a tough business downturn while managing debt is incredibly stressful, but recognising the problem early and seeking structured options shows sound practical judgment.
You originally borrowed Sh900,000, added Sh300,000 from your savings and bought the pickup. You subsequently paid about Sh500,000 over 14 months, but the financial position deteriorated. The lender then added Sh120,000 of charges and penalties to an outstanding balance of Sh788,000, producing a restructured balance of approximately Sh908,000.
At Sh28,600 for 48 months, you would make total scheduled payments of approximately Sh1,372,000. The exact outstanding principal needs to be confirmed from the lender’s statement, because the amount remaining will depend on how your payments have been allocated between principal, interest, penalties and other charges.
Concerning your precise choices, defaulting and letting the lender auction the vehicle is the worst route to take. Micro-lenders and auctioneers sell vehicles at forced-sale distressed prices, often 30 per cent to 50 per cent below the market value. In addition, auctioneer fees, storage charges, and legal expenses will be added to your bill. Because you signed a personal guarantee, the sale proceeds from a distressed auction will not cover the full debt, leaving you legally liable for the remaining balance, which the lender can pursue against your other assets or income.
Starting a brand-new business while carrying an active high-interest loan creates double pressure because new businesses usually take time to break even, and you cannot afford the risk of failing while a 22 per cent interest rate is applied to your loan. Moreover, since the lender holds the logbook as collateral, you cannot legally transfer ownership to a private buyer without the lender issuing a release letter upon receiving the proceeds.
You should start by arranging a private sale of the vehicle while working directly with your lender. By contacting them to explain that selling through a private buyer yields the highest possible price, you can agree to apply all sale proceeds directly toward the loan balance. In exchange, ask the lender to freeze further interest and penalties in writing, while negotiating a discount on any remaining debt to settle the account on favourable terms.
Next, address any remaining deficit by refinancing it at a significantly lower interest rate. If a balance remains after selling the truck, avoid continuing with high micro-lender rates. Instead, seek a lower-rate personal loan through a commercial bank or a sacco such as one you or your wife or family belongs to, where annual rates typically range between 12 per cent and 16 per cent. Shifting the debt to these lower rates can dramatically reduce your monthly payments to a manageable level.
Finally, redirect your efforts toward low-overhead income opportunities.
You also need to have a candid conversation with your wife. This is not simply a vehicle-business problem anymore because family members are already financing the monthly deficit. Agree together on the maximum amount of family money that can be put into the business and, importantly, a date by which the business must demonstrate that it can support itself.
You should give yourself a short, structured period to establish the pick-up’s true profitability, obtain its realistic sale value, obtain the lender’s exact settlement figure, and negotiate one final restructuring/settlement proposal.
If the pickup is genuinely loss-making and there is no credible improvement, an orderly sale followed by negotiation of the remaining loan is likely to be more practical than repeatedly borrowing from your family or simply waiting for an auction. You should not commit the sale proceeds to another business until the remaining debt and the viability of that business have both been addressed.
