Personal Loans in Kenya, All You Need to Know

Learn how to get the ideal personal loan offers in Kenya in a few hours. FUNDGECKO is here to provide all the necessary information about personal loans and all you need to know before signing up for one. 

The current market for personal loans

By December 2021, the bank lending rate charged on unsecured personal loans was 12.16%, which was a 0.01% increase from November’s 12.15%. 

That’s a 0.16% increase compared to January 2021’s 12% bank lending rate. This is higher than the record low of 9% in January 1972 but lower than the record high of 32.84% in April 1994. 

In the face of the post-pandemic harsh economic situations, the bank lending rate is at a reasonable level. Taking a personal loan would still be a safe deal.

How to get the best online loan offer

We all want to have as many good options as possible before we buy items online. Just like a rule of thumb, that also applies to getting an online loan offer. So how do you distinguish between a good offer and an unfavorable one?

A keen study of the table below will help you compare between online loan offers considering all factors

How to get personal loans using FUNDGECKO 

Are you just stranded and not sure of where to start when it comes to getting yourself a personal loan? Worry less. FUNDGECKO has got you covered. We offer the best available information about a loan and seek to navigate you through the whole process.

How to get started:

1. Start by identifying the consumer credits you feel can suit you
2. Compare for free between the options you get
3. Be sure to take a detailed tour into their contract conditions to know what you’re signing up for
4. FUNDGECKO forum’s team of experts will come in to help you in case of any doubts. The services are free.
5. Simply click “contract” and our team will guide you to each bank’s website so you can start the process of the loan application.

Why do you need a personal loan?

While personal needs and priorities differ from one person to another, here are some of the reasons why people apply for personal loans:

• Funding your studies
• Funding a car
• Development needs such as renovating a house or funding a car
• Making significant purchases
• Funding your wedding
• Funding a vacation trip
• Funding a PC or smartphone

Knowing why exactly you’re applying for a loan will help you to determine the best loan option.

How to sign up for a personal loan

You’ll follow typically the same process regardless of whether you’re applying for a loan in person or through an online platform. So what hurdles are you likely to jump before you get yourself the cash?

1. Work with more than one loan entity. Working with several loan offers as you pay attention to the least of details will help you to easily compare the one that’s more compatible with your needs.
2. After filling out the application form and taking key consideration of the loan’s terms and conditions, submit the form, either in person or online.
3. Online loan applicants are likely to receive a pre-approval faster than in the case of a physical application, where applicants take days to receive the pre-approval notification.
4. Prepare all the documentation required and drop them at the entity through the most favorable means.
5. After your application is approved, the entity will send you pre-contractual information indicating the conditions of your future loan. Read it through to avoid any surprises in the future.
6. If comfortable with everything about the loan, you’re able to sign either through digital signature software or by visiting the entity.
7. From here, you’re likely to receive the money after a period not exceeding two days.

Who qualifies for personal loans in Kenya?

1. Loans are only availed to persons of age 18 and beyond
2. Loan entities will require you to have a national ID number or a valid way of identification
3. Personal loans are only offered to Kenyan residents
4. Most loan entities will only give loans to persons with a regular, stable income. The bigger your salary the more the chances of getting a bigger loan
5. Little or no debt with other corporations will place you in an advantageous position to acquire a loan. Having too many debts and a poor credit score will automatically bar you from getting financed

Before pouncing on a loan offer, it is prudent to, first of all, assess your current income and determine whether you’re able to repay the whole loan. If not, you’d rather look for a more favorable one, just for the sake of good credit history.

Documentation required when applying for personal loans

Application is not complete until you submit all the required documentation:

• A copy of your national identification card
• Verification of your employer and income
• Provide reliable documentation of your credit history
• Provide your M-Pesa account or bank account number
• KRA pin certificate
• 6-month bank statement
• Letter of undertaking

Who grants personal loans in Kenya?

In Kenya, there have emerged several personal loan providers. They include:

• Peer-to-peer lending platforms
• Private lenders
• Banks

Personal loans through P2P lending platforms

• Friendly financing deals
• Faster and convenient loan application at the comfort of your home
• Avails loans with lower rates
• Loan agreement fee required
• High credit risks 
• Nothing like immediate funding even if you’re eligible for the loan

Personal loans through private lenders

• You’ll most likely get financed immediately
• No credit history required
• Less documentation required
• Unfriendly interest rates
• Cannot provide huge amounts of money at first
• If you don’t watch out, you may end up having debts with every private lender

Personal loans through banks

• Can provide huge amounts of money
• Yearslong payment terms
• Friendly interest rates
• May not be so favorable in the face of commissions
• Seniority is a big matter of consideration

FAQ: Frequently Asked Questions

What is a personal loan?

A personal loan makes a one-time delivery of payment to the borrower, who in turn will repay the amount in regular installments. It’s a form of installment credit. A personal loan is what you need when you have limited funds to make significant purchases.

Why was my personal loan application not approved?

In Kenya, borrowers work hard to ensure their names don’t land on the Credit Reference Bureau (CRB). If your name is there, you’re unlikely to get any loans, especially with major finance corporations. Besides, you may have fewer income requirements to apply for a certain loan.

Can I clear my personal loan before the set period?

Nothing should hinder you from paying the whole loan balance, especially if you send your lender a prior notice. 

Can I cancel a loan after signing?

The Kenyan government understands that borrowers can change their minds after signing up for a personal loan. Hence, it detailed rules governing how borrowers can go about canceling their loans even after they are approved. 

Are there serious consequences if I fail to complete a personal loan payment?

Failure to complete your loan payment will earn you a poor credit score, meaning other lenders will deny you loans in the future; your name may end up on the CRB, which will force you to repay the loan and make other additional payments to get your name out of the bureau.

When do I really need a personal loan?

Before applying for a loan, you must first see its need and plan on how you’re going to pay it back. It pays off to know that the process of loan application might take a little longer. It may also involve trying out different offers from different banks.

Taking time to do personal research of the loan offers you’re interested in will help you settle for the best offer. 

Be sure to have some form of income so that you don’t bar your application from being approved.

When do I need a fast loan?

We all get emergencies that need immediate funding. That’s where a fast loan comes in. While fast loans deliver cash in a matter of minutes, they may subject you to too many debts because they’re mostly unplanned for. Hence, once you get a fast loan, be sure to pay it as soon as possible before another emergency arises.

Wrapping Up

Personal loans are one of the sure ways to do away with your financial instability. Always look for a loan option that best suits your needs so that you get an easy repayment time. As you settle for a loan option, ensure that it’s something you can easily pay without incurring additional debts.

Beware of scammers, especially with private lenders. 

About this page, our methodology

We seek to give you clear guidelines so you may end up with the best available options. We also use updated information to help you get very attractive deals according to the current market trends.

Source: We get information from reliable sources including government reference portals. We’ve used Kenyan Law to answer questions relating to the law. 

About us: FUNDGECKO incorporates a team of professionals who specialize in personal finance and home economics products. It is an online comparator platform that helps you get the most favorable personal loans

Note: FUNDGECKO users get their services for free. We get our funding from elsewhere (advertising and our featured products).