Personal Loans

As the search for more creative and better ways to facilitate loan application continues to rise, both lenders and borrowers continue to practice secured loans. This means an increased willingness of lenders to give out loans by receiving collateral. 

Though in Kenya lending standards appear to be sophisticated, borrowers still protect their risk exposure by providing an asset. The asset turns to belong to the lender if the borrower cannot repay the loan amount. So it is important that borrowers should be open-minded and probing about what they may pledge as collateral. If the earning power is enhanced and improved on, the lender continues to look more favourable to the borrower.

Let us study secured loans in Kenya and everything you need to know.

What is a secured loan

A secured loan is a loan given to individuals who have deposited or provided any form of security. Examples of such securities are title deeds, logbook, share certificates, etc. They are acquired with specific collateral as requested by the lender considering the loan amount. A logbook loan is one of the highest types of loan applied for in Kenya by the citizens. 

Understanding secured loans

Secured loans can come as a business or personal loan in Kenya. The lender allows you to borrow by providing a collateral or security. Most times the collateral for secured loans are assets for money.

If you default on the loan, the lender sells off the asset or seizes the collateral. So with a mortgage loan for an instance, until you make the full payment, the home is not yours yet. Once you cannot pay, the bank takes possession of the asset.

How a secured loan works

In Kenya secured loans allow you to borrow and then submit collateral. Once you repay the loan, you take back your collateral. But if you cannot pay back the loan, the lender owns the property.

You can find these loans from many lenders like the bank, credit union, and online lenders. Most lenders offer these loans as mortgages and car loans. However, there are still other ways you can secure a loan using your equipment.

Finally, they require a little credit check depending on the lender. The lender determines your interest rates based on the amount you are applying for and the repayment duration. Interest rates for this type of loan are low when compared with unsecured loans. It is so because the risk of the loan is reduced by using an asset to secure the loan.

Rates and fees

The rates and fees associated with secured loans in Kenya are:

1. Interest rates
2. Negotiation fee
3. Annual renewal fee
4. Documentation and security fee
5. Valuation fee

Standard requirements

The basic requirements for any secured loan are the same everywhere in Kenya except some little difference. The requirements are:

1. Kenya national ID card
2. Passport 
3. Must have an account with the financial institution. Some lenders might also prefer you have an M-Pesa account
4. Employment card
5. The last 3 months’ pay slips
6. Evidence of income and consistent cash flow for self employed.
7. Valuation report for motor vehicle loans

Benefits

The benefits are many. To dive deep into the matter, it is one of the easier loans to apply for. You do not need to worry about your credit score and the lender, too, worries less. Alternatively, once you present the collateral, they reduce the risk of the loan. Once the borrower cannot pay back the loan, the lender sells it off to recuperate the fund. The benefits include:

1. The lender is relaxed and has an alternative way of recovering the money once the borrower cannot pay back the money.
2. It has a competitive and low-interest rate.
3. It has a longer repayment duration.
4. The borrower also enjoys in such a way that many lenders remove other associated fees once they request security.

Examples of secured loans

Secured loans can come in different forms and used for different purposes. So if you are borrowing funds for business or for personal usage, your security option can come in the form:

1. Bad credit loans
2. Mortgage loans
3. Car logbook loans
4. Vehicle loans
5. Shylocks loans
6. Equipment loans

Where to find secured loans

In Kenya, searching for where to get secured loans is just not far-fetched. You can collect secured loans from different financial institutions like:

1. Banks
2. Online lenders
3. Credit unions

What can you use as a collateral for secured loans

Kenya is a country that has a larger financial market. And they offer several types of loans with collateral while some are not. Collateral as an asset is pledged in exchange for a fund. The lender takes possession of the asset till the borrower pays off the loan. Collateral most lenders want are items that can easily be converted into cash. The items include:

1. Houses
2. Bonds
3. Cars
4. Stock
5. Jewelry
6. Antique furniture
7. machines

These assets represent a revenue stream for the lender once the borrower cannot repay the loan.

What to consider when looking at secured loans

Secured loans are risky in the sense that you lose everything once you cannot pay back the loan. It is also risky to the lender when the collateral cannot be easily liquidated. When comparing and considering secured loans, there are tips to keep in mind. They are:

1. The type of collateral or security required for the secured loan
2. The interest rate associated with the secured loan
3. Check if the secured loan interest rate is fixed or variable
4. Look out for other fees and hidden charges
5. Ask for the minimum and maximum loan amount
6. Consider also the credit score
7. Be sure to assimilate the whole requirements.

Conclusion 

With a secured business or personal loan, be rest assured that you repay with a low-interest rate. Be sure to check the requirements. While they continue to ask for collateral, be capable of paying back the loan, you do not want to be taken by surprise. And with a secured loan, checking your credit score is not taken too seriously by some lenders. Note that, it is helpful to ask and compare lenders before you take a step.

Instant Unsecured loans are loans that are granted with no collateral and within a few minutes. If a borrower defaults on the loan, it leaves the lender with few options to get paid outside of filing a lawsuit. In the course of this article, we will be looking more into instant unsecured loans and if they’re right for you.

What is an instant unsecured Loan?

As stated above, instant unsecured loan is a form of loan that doesn’t need collateral or a security deposit to receive and is disbursed immediately. With instant unsecured loan, instead of pledging assets, borrowers qualify based on their credit history and income. Lenders do not receive the right to take physical assets if borrowers stop making payments on unsecured loans. You promise to repay, but you don’t back up that promise by pledging collateral. 

An unsecured loan generally comes in three forms:

· Personal loans

· Student loans

· · Unsecured loans

How instant unsecured loans work

When applying for an instant unsecured loan, most lenders check the applicant’s history to see if you have successfully paid off loans in the past. Based on the information in your credit report, your credit score is created, which is a shortcut for evaluating your creditworthiness.

Lenders will also want to be sure that you have the financial capacity to repay any new loans. When you apply for a loan, whether secured or unsecured, lenders will ask for proof of income. Then, evaluation is done to ascertain how much of a burden your new loan payment will be relative to your monthly income. They typically do this by calculating a debt-to-income ratio.

Documents required for obtaining instant unsecured loan

The following document requirements are obtainable with most unsecured loan providers:

· Office address proof for self-employed individuals

· Proof of continuity of business

·         Processing fee cheque·         Duly filled loan application form

Proof of residence – utility bill, passport, etc.

Pay slips for last 3 or last 6 months

How to Apply for instant unsecured Loans?

The following are ways to apply for unsecured loans:

Lender’s website: A great percentage of lenders in the market now provide their services through their websites. You can visit the official website of the bank and apply for a loan with your credentials.

Loan aggregators: These are third-party loan aggregators that can help you find the best deals available in the market. With them, you can compare the different loan products and choose the best product that suits your specific needs.

Branch office: Lastly, you may also visit the lender’s branch office and apply for a loan in person. With the Internet, this choice of application is gradually going extinct. However, if you are not Internet savvy, you may use this option to apply for a loan.

Top banks in Kenya that offer instant unsecured loans

Knowing the fact that a great percentage of the risk involved in granting instant unsecured loan rests on the shoulders of the lender. Not every credit provider out there welcomes the idea of granting unsecured loans. The following banks offer instant unsecured loans in Kenya:

National Bank of Kenya

NBA is a commercial bank and licensed by the central bank of Kenya. You can get an unsecured loan of kes. 6,000,000 without collateral

Benefits

• Short processing period
• Easy payment
• No collateral required
• Top up your loan
• Easily accessible

Rates and fees

• Minimum of KSh 50,000 and maximum of KSh 6,000,000
• Interest Rate is made up of  CBR + Bank Margin % p.a on a  reducing balance.
• Has a minimum of 6 months and a maximum  of 84 months
• Negotiation fees  of 2% for first loans and buy offs. Then 1.5% for top-ups.

Internal costs

• Appraisal fees charged per individual

External costs

• Excise duty
• Insurance fee charged against retrenchment and death.

HDFC Bank

HDFC is one of the biggest private lenders in the country. The transparent process in offering loans helps customers with easy access to instant unsecured and other forms of loans.

Benefits

• Loan disbursal within just 10 seconds for pre-approved customers
• Loan disbursal within 4 hours for other customers
• Optional insurance coverage for customers
• Hassle-free application process

Stanbic Bank Kenya

Stanbic Bank Kenya is also one of the top-notch loan providers with a top-notch collection of loan products in its line-up. The personal loan offered by the bank comes with flexible terms for the benefit of applicants. They include:

Benefits

• Flexible payment and loan-top after 6 months or repayment
• Fast and hassle-free application process and fund disbursed within 48hours

What you need to provide

• Kenyan National ID
• Proof of Residence. You can come along with your utility bill or lease agreement.
• 3 months bank statement or your current payslip
• Kenya Revenue Authority PIN

HF Group

H.F Group is an integrated property and financial solutions regulated by Central bank of kenya. They are major financial institutions that offer SME loans and Asset financing in Kenya. The personal loan offered by the company comes with the following terms:

Features & benefits

• Maximum period of 36 months and Maximum amount of Kes. 500,000
• No early repayment penalties
• Attractive interest rate on reducing balance

How can I ensure my instant unsecured loan application is approved?

Applicants can follow the steps mentioned below to ensure that their instant unsecured loan applications do not get rejected:

·         Bills and existing loans should be paid on time to maintain a high credit score.

·         In case a customer has a low credit score or has never applied for any credit before, he or she can build his/her credit score or enhance it over time.

·         Ensure your earnings match or exceed the minimum income criteria of the concerned lender before applying for an unsecured loan.

·         Having a stable and regular source of income also increases the chances of an unsecured loan application getting approved.

Pros and Cons of instant unsecured Loans

·         From the borrower’s perspective, the main advantage of an instant unsecured loan is the fact that it is risk free and gotten within a short while. If you receive an instant unsecured loan and can’t make payments, you don’t risk losing your assets. You just put your credit score at risk. For people and businesses with instant unsecured loans, there is a high chance that your debt will be discharged if you file for bankruptcy.

·         Additionally, since instant unsecured loans don’t require any collateral and are paid within a few minutes after application, the lender takes on more risk. This generally translates to higher interest rates and less favorable terms. While instant unsecured loans may be less risky for the borrower, it is important to know how much more it could cost you over its duration. You may find that putting an asset down as collateral is more beneficial than the extra money you will pay as interest.

Conclusion

An instant unsecured loan can be one of the best loan options for blacklisted people. The fact that you don’t have to provide any form of collateral and still get your loan within a few minutes is definitely an advantage to the borrower. Especially in a situation the borrower has little or nothing to offer at all. You can enjoy instant unsecured loans from any place you are in Kenya. All you need is to login to the lender’s website or visit their physical office. 

The COVID-19 virus has had its toll on the economy of Kenya and the world as a whole. The major negative effect being the dwindling state of business and services. The covid effect left no sector unhampered. Owing to these facts, the need to make funds available to alleviate inconveniences the virus might’ve caused became imminent. This article contains a swift insight of all you need to know about how to access these funds.

What you should know about COVID-19 Loan?

COVID-19 loan is loan offered by Kenyan government to small and medium-sized businesses. This loan is meant to help them survive the ‘COVID-19’ recession with other changes to make the credit to be accessible. 

The government of Kenya knows that the revenue of businesses is dropping. Besides that, citizens of South Africa continue to lose their jobs. In order to sustain their jobs and keep businesses from closing down, the idea of cOVID-19 loan becomes wonderful.

What are the requirements for cOVID-19 loan?

The requirements are essential when applying for a COVID-19 loan. Whether you’re taking a personal loan or a business loan. These requirements give the lenders enough details to approve your loan.

• The facility the business needs to fund especially, which is up to 6 months of qualifying expenses
• Present a cash flow projection. Also substantiate the facility you request.
• Provide an account of the business’ year-to-date management accounts. Also note the current financial position and financial performance.
• Most recent financial statements of the business
• Proof of Kenyan Revenue Service (KRS) registration
• The business’ constitutional documents
• Ensure you did not apply for the same loan from a different lender

How can my business qualify for the cOVID-19 loan?

Mostimes, qualification rules might vary depending on the loan provider. While some might be rigid on the requirements, others might seem a little loose. According to research, the following are obtainable ways to qualify for a COVID-19 loan;

• Application must be on behalf of a company, statutory body corporate, close corporation, sole proprietorship, trust or partnership, association, joint venture or any similar entity. However, you must not be state-owned entities, listed companies and companies with capital market funders or funding instruments.
• Your business has to be in good standing as at 31 December 2019
• The business must be registered with KRS
• Your business must have no existing capacity to borrow
• Ensure that your business accrued negative impact of lockdown and requires funding to restart operations during different levels of lockdown
• You must not apply for this loan at any other lender

How can I apply for the cOVID-19 loan?

You must make your loan request known before your lender approves it. For every form of loan, you must apply according to the way your lender operates.

Apply for the cOVID-19 loan in the following ways:

1. You can apply online by visiting their website. Simply do it with your smartphone, tablet, or personal computer. Log into their website and follow the prompts.

2. You can also call their customer service representative. Make your loan request known to them and then follow their instructions on how to get your loan.

How long will the cOVID-19 loan last?

Before any business gets a loan, it is important to find out how long the maximum payback range. The cOVID-19 loan tenure is from 6 months and above.

Conclusion

The small and medium-sized businesses in South Africa have seen an enormous disarray during the lockdown. Because the government of South Africa sought the right move to contain the spread of the dreaded coronavirus. And this loan offers the lifeline to get businesses back to where they were before the lockdown.