Cheapest Bank Loans in Kenya – All You Need To Know

Banks vary in strength and offer different types of loans with unique features. The most peculiar thing surrounding these types of loans is the fees and interest they attract.

Some banks offer cheap loans with standardized fees. The fact that most Kenyans depend on loans to navigate through financial challenges makes them seek cheap loan offers.

Bank loans are said to be cheap when they have a low interest rate with a long duration, no or low origination fee, no hidden charges, and no late fees or other fees.

Cheapest Bank loans in Kenya

Based on our research, we came up with a list of banks that offer the cheapest loans in Kenya. Some of these banks are:

1. Central Bank of Kenya

The Central Bank of Kenya (CBK) has the benchmark as the best lender with a 9% interest rate. Their loans are unique and follow due processes.

2. Victoria Bank

This is one of the cheapest banks that offer loans at a subsidized rate. They charge more fees on loans other than interest prescribed. They also stick to loan agreements and offer more affordable credits.

3. KCB

KCB loans often attract a 13% interest rate. They offer different categories of loans. Ranging from Masomo loans, personal unsecured check-offs, salary advances, etc. The only extra fee you pay is a negation fee of 2.5%. Interest rate comprises CBK rate at 9% and bank variable margin of 4%.

4. National Bank of Kenya

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


  • 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.

5. 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.


  • 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

6. 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:


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

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

7. HF Group

HF Group is an integrated property, and financial solutions regulated by the 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

Interest rates in Loans per Bank

  1. Cooperative bank – 13.5%
  2. Equity bank – 13%
  3. KCB -13%
  4. Barclays Bank – 14%

Common Types of Cheap Loans Offered by Banks

  1. Secured loans
  2. Salary advance

How to Conduct a Quick Search on the Cheapest Bank Loans in Kenya

To conduct a quick search on the cheapest bank loans in Kenya, follow the process below:

  1. Learn how to use the credit calculator online/mobile application
  2. Check out sites like loanspot.io/ke
  3. Read reviews on bank loans either online or on Google Play Store.

Factors That Cause a Change in Interest Rate

The factors that cause changes in interest rates include:

  1. Monetary Policy: Central banks, such as the Federal Reserve in the United States, have the authority to set interest rates. By adjusting the benchmark interest rates, central banks can influence borrowing costs for businesses and consumers.
  2. Inflation: When inflation is high, central banks may raise interest rates to curb inflationary pressure and maintain price stability. Higher interest rates can reduce borrowing and spending, which can help slow down inflation.
  3. Demand and Supply of Credit: Interest rates are influenced by the demand for credit from borrowers and the supply of funds available from lenders. When demand for credit is high compared to the supply of funds, interest rates tend to rise. Conversely, when there is less demand for credit or an excess supply of funds, interest rates may decrease.
  4. Economic Growth and Financial Markets: Interest rates can also be influenced by the overall state of the economy and financial markets. During periods of economic expansion, interest rates may rise to control inflation and cool down the economy. Conversely, during economic downturns, central banks may lower interest rates to stimulate borrowing and spending to boost economic activity.

It’s important to note that interest rates are complex and can be influenced by multiple factors, and the interplay between these factors can vary depending on the specific economic conditions and policies in different countries.

How Commercial Banks Choose Their Interest Rates

Commercial banks determine interest rates using several factors such as:

  1. Market demand: The bank’s cost of obtaining funds is one of the most significant factors in determining the interest rate. The bank’s cost of borrowing affects its lending rate to customers, as the bank needs to earn enough interest to cover its cost of borrowing and also make a profit.
  2. Operational costs: Operational costs such as overhead, administrative and personnel expenses, and other costs of providing loans also contribute to the interest rate charged.
  3. Yield curves.
  4. Additionally, commercial banks assess potential borrowers’ credit scores, credit history, and assets to determine the risk of lending to them and the appropriate interest rate.
  5. Finally, commercial banks also consider market conditions, for example, the prevailing interest rate trends, the demand for credit, as well as, the economy’s overall health and stability.

In conclusion, interest rates are influenced by various economic factors, including market demand and the bank’s operational costs. Banks aim to maximize profits while still remaining competitive by striking a balance between profitability and affordability to their customers.

Credit Calculator Mobile Application

This is a tool that calculates and shows the total cost of credit pricing mechanisms. The application helps borrowers to compare bank loan costs based on standardized gauges.


Most borrowers fall prey to banks that offer expensive loans. The reason is that they patronize the ease of getting the loans rather than knowing the interest or other fees attached.

In urgent situations, borrowers may not notice some features. Some banks exploit Kenyans at this point of vulnerability. 

Note that it is better to conduct proper research for the cheapest loans before taking one. This would enable you to make your repayments easily.