How mobile Loan apps in Kenya like Branch, Tala and saida work

Mobile Loan Apps in Kenya have been on a steady rise due to high mobile penetration in the country fueled by mobile money transfer service Mpesa.

What follows are some of the common features of mobile lending apps in Kenya and how they work.

Unsecured

Almost all Mobile Lending apps in Kenya offer unsecured loans. They do not require any security or collateral.  

Short Term

Mobile Loan apps have a short repayment period. Depending on the amount of loan one has borrowed, the repayment period ranges from 7 to 30 days

Low amount of Loan

An analysis we have conducted indicates that 90% of mobile loans in Kenya disburse less than Kenya shillings 20,000 ($200) to borrowers. Although most of them indicate that they do issue loans between Ksh. 1,000 to 50,000 depending on your creditworthiness, you will hardly find any borrower with a loan limit above Ksh. 20k.

Interest Rates

Interest rates on mobile loan apps vary significantly depending on a number of factors like the amount of loan you have borrowed and the days you will take to repay (one week, two weeks or a month). The longer you take to repay, the higher the interest rates and vice versa. The average interest rate is 15% per month.

Instant Online Loan Disbursement

Once you have borrowed a loan from mobile lenders like Branch, Tala, Okash, Saida e.t.c it takes between 2 minutes to 5 hours for it to be disbursed or rejected. Most of the apps disburse loans to borrowers’ mpesa accounts.

Loan Application Process

Applications for mobile loans are simple. All you are required to have is mpesa account, a national ID, and a smartphone. Then go to the Google Play Store, download the mobile app lender that you are interested in, install, apply for your loan and receive it instantly.

Your loan application might however be rejected depending on your credit score rating (learn how mobile apps calculate credit score).

Consequences of loan defaulting

In Kenya, if you do not pay your mobile loan within the stipulated days, it will be rolled over to the next repayment period with additional fees. However, rolling over in most apps stops at 90 days and your name is submitted to the credit reference bureau (CRB).

The negatives of being on CRB is that you reduce your chances of getting a bank loan, you may miss on some employment opportunities due to lack of a CRB clearance certificate and your credit score will be negatively affected.

Learn how to apply for a CRB clearance certificate.

Takeaway: Branch app is the most efficient mobile app loan provider in Kenya. However, its interest rates are high. Timiza app has the lowest interest rates.

Additional info: You can check a list of all mobile loan apps that we have reviewed