On the Internet, many inquiries have been made on how to get a personal loan in Kenya from both established and upcoming lenders. Many people are petrified by the term “personal loan.” Personal loans are a difficult proposition for some, while they are just out of reach for others. The terrible reality is that not everyone is eligible for a personal loan.
Your credit score, salary, and other financial factors influence your ability to obtain one. Even if you match the eligibility conditions, you may still have to jump through several hoops to receive the funds.
There are no straightforward answers to how to secure a personal loan in Kenya. Each lender has distinct loan approval standards and will consider your unique financial status when assessing eligibility and interest rate. But let’s take a step back from the doom and gloom to see whether we can answer some questions before checking out.
We are going to discuss in detail how to get a personal loan in Kenya. Since there is no standard process or guideline that applies to all lenders, we are just going to use an example of a leading loan provider in Kenya, and in this case Mwananchi Credit.
What Is A Personal Loan?
A personal loan is a form of loan that people can use to address short-term or long-term financial demands. Personal loans are available in both secured and unsecured forms. They can be used for a variety of things, including debt consolidation, debt refinancing, home repairs, medical costs, and so on.
Personal loans are not available from all lenders, but those usually provide consumers with a variety of lending conditions and repayment alternatives. Personal loans are often structured with a fixed interest rate for a specified period. Once you’ve paid off your loan in full, you’re free to walk away from it, however, it’s pretty uncommon for lenders to provide you the option to extend the loan if you so desire.
When To Take A Personal Loan
Personal loans are a legitimate source of finance that can be used for a variety of purposes. You are not restricted in how you spend the money with certain personal loans, which can be useful or negative depending on how you look at it.
Despite this, there are some excellent reasons and some negative reasons to take out a personal loan. Taking out a personal loan for the wrong reasons can have serious financial ramifications, so proceed with caution.
Personal loans are an excellent option for the following reasons:
- A personal loan allows you to invest in your personal development. You may use the funds to pay for an online course to improve your skills or to start a business, for example.
- You may use your loan to purchase an appreciating item. To make a profit, you might take up a loan and buy a piece of land.
- Personal loans can also help you meet the costs of a medical emergency by providing you with the funds you require. It can be used to pay for medical expenditures for you or a loved one in the event of a medical emergency.
- You can obtain a lower-interest loan and use it to pay off your present loan in order to eliminate your debt. Because of the lower interest rates, you’ll be able to get out of debt faster.
Some of the incorrect reasons for taking out a personal loan are as follows:
- If your spending exceeds your income, taking out a personal loan to offset your expenses is usually not a wise choice because you will find yourself in debt.
- If you find yourself taking out monthly loans to cover your usual bills, this is a bad idea.
- Taking out a loan to buy something you can’t afford is a bad decision unless the purchase will result in greater income for you in some way.
- Taking out a loan to purchase something you cannot afford will not only burden you with debt, but it will also significantly increase the price of what you are purchasing due to interest.
- Borrowing money for a vacation is likewise a terrible idea. If you don’t have enough money for a trip, you should either save up or alter your destination to one where you can afford it. If you take out a personal loan to pay for a vacation, you will be saddled with debt for something that isn’t an absolute requirement.
Types Of Personal Loans
In Kenya, personal loans are classified into two types: unsecured and secured.
Personal Loans Without Collateral
As long as you have a steady source of income, you can get a substantial sum of money with an unsecured personal loan. In the event of nonpayment, you utilize an asset as collateral to secure the loan with a banking or lending organization.
An unsecured personal loan is one in which you get money based on your income. Because lending institutions consider these loans to be more risky, they are frequently priced higher.
Unsecured personal loans include the following:
Short Term Loans
These are unsecured personal loans with extremely short repayment terms, typically ranging from 1 to 60 days. These loans are ideal for addressing unexpected expenses while you wait for your next payment.
Short-term unsecured loans are generally easy to obtain, do not require extensive documentation, and have quick approval times (be aware that app-based loan providers may scrape personal data from your device in lieu of official paper proo