Types of Loans Available in Kenya: A Complete Breakdown
Kenya's lending market offers diverse loan products tailored to different financial needs. Understanding each type helps you choose the right borrowing solution.
Personal Loans
Purpose: General expenses, debt consolidation, education, or emergencies
Key Features:
- Amount: KES 5,000 - 2,000,000
- Tenure: 3-60 months
- Interest: 12-25% p.a.
- No collateral required (unsecured)
Lenders:
- Banks: KCB, Equity, NCBA
- Digital: M-Pesa loans, Branch, Tala
- SACCOs: Most offer personal loans to members
Best for: Salaried employees with stable income
Business Loans
Purpose: Business startup, expansion, or working capital
Key Features:
- Amount: KES 100,000 - 10,000,000+
- Tenure: 12-60 months
- Interest: 10-18% p.a.
- May require collateral or business guarantors
Documentation Needed:
- Business registration
- 3 months bank statements
- Business plan
- Tax compliance certificates
Best for: Registered business owners with 6+ months operation history
Mortgages (Home Loans)
Purpose: Property purchase or construction
Key Features:
- Amount: KES 500,000 - 100,000,000+
- Tenure: 5-25 years
- Interest: 8-12% p.a.
- Property is security
Requirements:
- Stable employment (minimum 2 years)
- 10-20% down payment
- Proof of income
- Property valuation
Lenders: Housing Finance, NCBA, KCB Bank
Best for: Homebuyers with steady income
Vehicle/Auto Loans
Purpose: Car or motorcycle purchase
Key Features:
- Amount: Up to vehicle value
- Tenure: 12-60 months
- Interest: 10-16% p.a.
- Vehicle is security (logbook held)
Process:
- Choose vehicle first
- Get loan pre-approval
- Purchase and register
- Vehicle becomes collateral
Best for: Employed individuals needing reliable transport
Asset Finance
Purpose: Business equipment or machinery
Key Features:
- Amount: Value of asset
- Tenure: 12-84 months
- Interest: 9-15% p.a.
- Equipment is collateral
Common Uses:
- Industrial machinery
- Agricultural equipment
- Computers and IT equipment
- Construction tools
Best for: Business owners needing capital equipment
Student Loans
Purpose: Education funding
Key Options:
- HELB: Government loan for deserving students
- Bank loans: For international or private school fees
- Employer schemes: Some companies offer education loans
- Partner institutions: Universities with partner lenders
Repayment: After graduation, usually 12-month grace period
Microloans
Purpose: Small emergency needs or business starter loans
Key Features:
- Amount: KES 1,000 - 50,000
- Tenure: 7-30 days (short-term)
- Interest: 5-15% (daily rates)
- Instant approval
Lenders: M-Pesa, Airtel Money, Digital banks
Best for: Quick cash needs, self-employed
Salary Advance/Emergency Loans
Purpose: Bridge expenses until payday
Key Features:
- Amount: Up to 50% of monthly salary
- Tenure: Until next paycheck
- Interest: Lower rates (payroll deduction)
- Employer partnership
Process: Deducted automatically from salary
Best for: Salaried employees with temporary cash flow issues
SACCO Loans
Purpose: Member-exclusive financing
Key Features:
- Amount: Varies by SACCO
- Tenure: Flexible
- Interest: 8-12% p.a.
- Easier approval for members
Benefits:
- Lower rates than banks
- Flexible terms
- Community support
- No CRB impact sometimes
Best for: SACCO members with regular savings
Comparison Table: Quick Reference
| Loan Type | Amount | Rate | Tenure | Collateral |
| Personal | 5K-2M | 12-25% | 3-60mo | No |
| Business | 100K+ | 10-18% | 12-60mo | Maybe |
| Mortgage | 500K+ | 8-12% | 5-25yr | Property |
| Auto | Vehicle value | 10-16% | 12-60mo | Vehicle |
| Microloan | 1K-50K | 5-15% | 7-30d | No |
| SACCO | Varies | 8-12% | Flexible | Maybe |
How to Choose the Right Loan Type
Ask yourself:
- How much do I need?
- When do I need to repay?
- What's my repayment capacity?
- Do I have collateral?
- What's my credit history?
Decision Matrix:
- Fast & Small: Microloans (M-Pesa, Tala)
- Medium & Moderate: Personal loans (banks/digital)
- Large & Long-term: Mortgages, business loans
- Best rates: SACCO loans
- Most flexible: SACCOs
Next Steps
- Learn how interest is calculated
- Understand the loan application process
- Improve your loan eligibility
FAQ
Can I get multiple loans simultaneously?
Yes, but each affects your debt-to-income ratio. Most lenders prefer you have <40% DTI.
What happens if I default?
Your account is reported to CRB (Credit Reference Bureau), damaging your score and making future borrowing difficult.
Can self-employed people get loans?
Yes. You'll need 6-12 months of bank statements showing business activity plus tax compliance.
Which loan type has the fastest approval?
Microloans: minutes to hours. Digital personal loans: same day. Banks: 3-7 days.