How can I get a loan with bad credit in kenya is a question this article will answer. Majorly in Kenya, bad credit can make it harder for you to borrow money. Bad credit I mean is having a score from 580 and below.
And if you do not meet up with the requirements and qualify, you are likely to pay a very higher interest rate. However, the high interest rate is for you to make up a great level of default risk.
We will take you through some loan platforms in Kenya that offer bad credit loans.
What is bad credit
Bad credit is a low score that makes it difficult for you to borrow. It is a low credit score to emanate from your inability to pay as at when due.
What is a bad credit loan
A bad credit loan is a loan for a set of individuals with poor credit scores.
Features of bad credit loans:
- It comes with a high interest rate
- The lenders considers a lower principal amount
- They can request additional information from the borrower.
Channels to get a loan with bad credit in Kenya
In Kenya, watch out for lenders who guarantee huge principal amounts with bad credit. Do your research well. Some channels include:
- Private lenders
- Log-book loans
- Credit unions
- Income rental loans
- Peer to peer lending
- Payday loans
- Micro loans
Loans for bad credit in Kenya
Based on research and analysis in Kenya, we picked platforms to get personal loans for bad credit.
Note: Personal loans are major loans you can get or qualify for with a bad credit. They are:
Private lenders are individuals who work on their own and lend money to the citizens. Most times, these can be your fellow citizens, associates and external people.
If dealing with private lenders, ask to see valid identification and try to contact references that can verify these lenders. Know their requirements as it concerns bad credit.
Here, you can use your car to secure your loan and use the vehicle log-book documents as collateral. You can borrow up to 55% of the value of your car. Bad credit doesn’t matter, what matters is a collateral.
A credit union is a financial cooperative organized and run by its members. There are different credit unions to suit your needs, be it corporate or personal. Your bad credit doesn’t really matter much here, interest rates aren’t that high.
Income rental loan
This enables you to use your rental income as security for a loan when you have a bad credit. The loan amount you’re eligible for depends on your income rental. These loans are mainly for landlords with bad credit. However, the downside to this is that you stand a chance of losing the property if you default.
Peer to peer lending
It is also called “crowdlending”. This option is where groups of women come together. These groups have the same vision to contribute and lend to each other.
The peer-to-peer lending includes that of Joywo loans. Where during monthly table meetings, groups return their loans. They don’t mind your bad credit.
Payday loans are instant loans for small amounts of money meant for a short period (normally for a few months). It can come with high interest rates. They will take loan repayments from your monthly salary. This option is best for emergencies and urgent cash needs.
Some micro lenders like Bidii credit requests for collateral for small loans. It operates like payday loans, a small amount of money for a short period. It can come with higher interest rates.
How much you can borrow with bad credit
Lenders are not willing to sacrifice or take enormous risks by giving out a huge loan. Individuals with bad credit loans should not expect the amount given to a person with a good credit history. There’s no specific amount you can borrow. The lender determines it.
How can I get a loan with bad credit
Getting a loan with a bad credit, there are things to consider:
- Checking your credit status: check your credit status and go for your credit history first. Make sure there’s no error found which can affect your application
- Decide and know the type of loan you are going for
- Know the loan to avoid. Look out also for the eligibility.
- Reduce your debt: if you have an outstanding debt, pay up to 35% or even more. It helps boost your credit status.
- Look out for multiple lenders: when you check the requirements and you know you can’t get approval on your own, apply with someone. The person can serve as a guarantor. Also, look out for multiple lenders and apply.
How to fix a bad credit
To fix your bad credit, there are things you need to do. They are:
- Borrow when you need it
- Try to pay on time and not default
- Start with small loans. From there you can build up your credit score.
It is critical to borrow wisely. It is good to focus on how to get approved for loans when you have a bad credit. However, prioritize affordable loans, so it won’t make things worse.
Have a purpose of borrowing, when you borrow, use the cash to fund your purpose. Try also to have a standing source of income, so you won’t find it hard in loan repayment.