Thinking of Downloading that Loan App? Here’s What You Need to Know.

Up until a few years ago, the only way to get a quick instant loan in Kenya was to borrow from friends, relatives, or acquaintances. With formal lending restricted to people with established credit records either through their employer or past dealings with a financial institution, getting loans for most people was not easy.

All this changed with the entry of the Credit Reference Bureau (CRB). Depending on who you are asking, the CRBs (there are 3 CRBs in Kenya), have either unlocked access to credit for people with good debt repayment histories or completely shut out anyone whose been blacklisted due to failure to repay.

Having this database of borrowers that could be accessed by lenders largely reduced their risks as it was now possible to tell who could be trusted to repay and who to avoid.

There was still a huge market gap that the formal credit market did not serve and was ripe for the picking. This was ushered in by the arrival of Fintech and more specifically in Kenya, digital lending apps. Credit is now readily available to anyone with an ID and a smartphone.

An investor could now hire web developers or purchase existing app templates and without much regulation enter the money lending business. Fundraising could be done for about 10% per year in foreign money markets and foreign investors (Kenyan banks lend at about 13% per annum) and lending by the apps is usually done at least 7% per month or 84% per year! for the least expensive digital loan lender. Some lenders average more than 500% per annum! This looks slightly better expressed as 10% per week. Don’t you agree?

As someone who’s had extensive experience with several apps, I can say that there are reasonably great apps and some really bad ones! Seriously, some shouldn’t be downloaded unless in very dire straits.

In the good camp, there are contenders like Tala, which in my opinion is one of the best. Followed by Branch as a close second. Their rates are reasonable credit limits grow quite fast and the user experience is quite pleasant. They will not spam you or harass you.

Zenka Kenya has also done reasonably well, only losing out to the first two due to higher interest rates as at the moment of this writing about 20% per month. They have a feature where you can delay the payment by 7 days,14 days, or a month, of course at an added cost. they will not spam you.

In the terrible camp, let’s just say there are a lot of contenders with similar unsavory practices. I would be surprised if most of these survive. I’d strongly advise you to delete contacts you wouldn’t want your enemy to have before you download most of the rest. Keep away if you have a weak constitution. Read reviews on Google Play store especially the critical ones and you will have a good idea of what your experience is likely to be.