Kenyan lenders quote interest in two ways, and they are not comparable:
- Reducing balance - interest is charged on what you still owe, so it falls as you repay. Banks usually quote this way.
- Flat rate - interest is charged on the full amount for the whole term. Some SACCOs, microfinance lenders and car financiers quote this way, and a flat rate costs almost twice as much as the same number on a reducing balance.
Loan repayment calculator
Monthly repayments and total interest on a loan, on a reducing balance or at a flat rate.
Before you sign
- Ask for the total cost of credit in writing: interest plus processing fees, insurance and excise duty.
- Check whether you can repay early, and what that costs.
- Compare the monthly payment with your real take-home pay, using the salary calculator.