The Best Loans in Kenya For Your Needs

It’s not uncommon to need some financial assistance, whether it’s to buy a car, fund a business, or pay a utility or emergency medical bill. The reality of personal finance is that sometimes, you can’t do it alone. 

This is where taking out a loan becomes a viable solution. Loans give you access to the cash you need, allowing you to meet your personal and financial goals even when you don’t own the necessary capital.  

Fortunately, there are several types of loans in Kenya issued by banks and non-bank financial institutions.

But not any loan will do. As you look for credit, it’s crucial that you find the best possible loan for your needs. The last thing you want is to end up with a badly structured loan that you’ll have a hard time repaying. 

So, who do you go for? 

Types of Loans in Kenya

Banks, SACCOs, and  Microfinance institutions all have different loan products available to their clientele. These can be secured or unsecured and have varying interest rates, repayment terms, and eligibility criteria. 

Let’s see what some of these loans are.

Personal Loans in Kenya

A personal loan is the best option if you’re looking for a loan to finance personal needs such as medical bills or home renovations. Personal loans are unsecured. Therefore, you don’t need collateral to apply for them. 

They are also flexible, with repayment periods ranging from 12 to 60 months. However, the interest rates on personal loans tend to be higher than those on secured loans, making it essential to compare different lenders and their rates before committing to one. 

One element that helps lenders determine chargeable interest rates is the level of risk. Unsecured loans carry a higher level of risk than secured ones. This is partly why their interest tends to be higher. 

Business Loans in Kenya

Business loans are an excellent option for start-ups or existing businesses to help finance operational costs, equipment purchases, and expansion plans. 

Such loans in Kenya are offered by various institutions, including banks, microfinance institutions, and SACCOs. The interest rates on business loans vary, so it’s essential to compare different lenders and their rates to find the most suitable option for your business needs.

Education Loans in Kenya

Education loans are designed to help students finance their education-related expenses. You can use an education loan to get funding for your tuition fees, accommodation, and textbooks. 

Various lenders in Kenya offer education loans. Banks, microfinance institutions, and SACCOs all have their unique education loans. But generally, education loans come with a grace period, which allows students to start repaying the loan after completing their studies. 

It’s important to note that education loans may have higher interest rates than other types of loans.

Asset Financing Loans in Kenya

Asset financing loans are designed to help businesses acquire assets such as machinery, vehicles, or property. The assets purchased serve as collateral for the loan, which is repaid in installments over a set period. 

Once an asset is purchased, it’s jointly registered with the financier and the purchaser. Ownership is only transferred to the purchaser after the facility has been settled in full. That way, it serves as collateral for the loan. This is what allows asset financing loans to have lower interest rates than other types of loans. 

Examples of companies that offer asset financing include MOGO and Mwananchi Credit Limited. Most banks and SACCOs offer this type of facility as well.

Payday Loans in Kenya

Payday loans are short-term loans designed to cover unexpected expenses between paychecks. They are easy to apply for, and the loan amount is usually disbursed within a few hours of application. 

However, payday loans tend to have higher interest rates than other types of loans, so it’s essential to consider the cost of borrowing before taking out a payday loan.

Credit Cards

Credit cards are an option offered exclusively by banks. They are a popular way to finance purchases and manage cash flow. They offer a revolving line of credit that you can use to make purchases or withdraw cash. 

Credit cards come with varying interest rates and fees, and the repayment terms depend on your payment behavior.

Factors to Consider When Choosing a Loan in Kenya

If you’re considering taking out a loan in Kenya, there are several factors you should consider before making a decision. 

Interest rates   

The interest rate is the amount you’ll be charged on top of the amount you borrowed.  It determines the cost of credit. The higher the rate, the more expensive the loan facility becomes. 

Lenders typically offer different interest rates. Therefore,  it’s important to compare loans and identify the best deal.

Charges

Some lenders may charge additional fees and charges, such as application fees, processing fees, or early repayment fees. Make sure you understand all the fees associated with the loan before you sign up.

Loan terms

The loan term refers to the length of time you’ll have to repay the loan. Longer loan terms generally mean lower monthly repayments, but you’ll end up paying more in interest over the life of the loan. On the other hand, shorter loan terms come with higher monthly repayments. Fortunately, the total interest will be lower. 

Similarly, find out the terms of repaying your loan early in case you become liquid enough to do so. Some lenders can restructure the loans to allow you to make a lump sum payment. 

Eligibility requirements

Different lenders have different eligibility requirements, so ensure you meet all the criteria before applying.

Loan amount

Consider how much you need to borrow and whether the lender can provide that amount.

Repayment schedule

Find out how often you’ll need to make repayments and whether the schedule is flexible enough to accommodate any changes in your financial situation.

Customer service

Look for a lender with good customer service, including accessible support and clear communication. 

Reputation

Research the lender’s reputation to ensure they are trustworthy and have a good track record with customers.

Final Take

We have numerous banks, Saccos, and financial institutions that advance loans to clients. However, not all loans are created equal. 

As such, take the time to thoroughly assess different lenders and loan types to find one with the most favorable terms. Think about why you need the loan, how much credit you can afford, and how comfortably you can make the repayments. 

With that in mind, you can start your search for the best loans in Kenya. 

FAQs on Loans in Kenya

Can I apply for a loan if I have a bad credit score?

Yes, you can apply for a loan even if you have a bad credit score. However, you may be required to provide collateral or a co-signer to secure the loan. Your interest rate might also be higher since lenders will view you as a risky borrower. 

How do I compare different lenders and their rates?

You can compare different lenders and their rates by visiting their websites or contacting them directly. Before choosing a lender, consider the interest rates, loan application charges, repayment periods, and other terms and conditions.

Can I negotiate the interest rate on a loan?

Yes, you can negotiate the interest rate on a loan. Some lenders may be willing to lower their rates if you have a good credit score or are a loyal customer.

How long does it take to get a loan approved?

The time it takes to get a loan approved varies depending on the lender and the type of loan. Some loans, such as payday loans, may be approved within hours, while others, such as business loans, may take several weeks.

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