Influence of Repayment Period on Choice of Loan Packages by Sacco Members in Kakamega Central Sub County, Kenya

Abstract: This study examined the influence of repayment period on loan package choices among SACCO members in Kakamega Central Sub-County, Kenya, addressing the challenge where members struggle to access loans despite substantial deposits due to repayment constraints. The objective was to determine how repayment period influences loan package selection, guided by Agency Theory which explains the relationship between SACCO management and members in setting loan terms. Using a descriptive survey design, data was collected from 374 respondents selected from a population of 9,758 SACCO members through structured questionnaires out of which 346 questionnaires were filled and returned. Regression analysis revealed that repayment period significantly influences loan package choice (R²=0.232, β=0.482, p=0.004), explaining 23.2% of variation in selection. The study concluded that members favor loan packages with repayment terms aligned to their income patterns and loan purposes, with 44.5% preferring development loans offering 36-48 month terms. Key recommendations include implementing flexible repayment options, aligning periods with member income patterns, and considering loan purpose when setting terms.