Are you ready to acquire a vehicle for your business or personal use but find yourself short on funds? Fear not, as car financing could be the solution you need.
Essentially, car financing is a financial service that allows you to own a car by making a minimal initial payment. The process involves securing a loan from a financial institution, which you’ll then repay over time according to the agreed-upon terms.
Navigating the world of loans can be daunting, but we’ve done the legwork for you. Our research on Kenya’s top car financing providers will equip you with the necessary insights to make an informed choice.
The Best Car Loan Companies in Kenya
| Car Loan Lender | Category | Interest rates {pa} |
| WATU | Non-Bank | 27.5% |
| HAKKI | Non-Bank | 23% |
| MOGO | Non-Bank | 36% |
| Stima Sacco | SACCO | 12.75% reducing balance |
| Waumini Sacco | SACCO | 14% reducing balance |
| Safaricom Sacco | SACCO | 12% reducing balance |
| NCBA | Bank | 18.1% reducing balance |
| ABSA Bank | Bank | 18.5% |
| Standard Chartered | Bank | 16% |
| Equity Bank | Bank | 14.6% to 21% (risk-based) |
| Diamond Trust Bank | Bank | 16% reducing balance |
NB: Non-bank lenders are ideal options for individuals who are growing their businesses and lack substantial collateral or bank records. SACCOs are suitable for those with limited savings capacity and who excel at forging connections with potential guarantors. Meanwhile, banks are a fitting choice for those with a steady income and/or who possess collateral.
Best Car Financing Companies in Kenya
While well-known banks and SACCOs are known for their low-interest rates on loans, they might not always be the most suitable option for many individuals, particularly in light of the current economic challenges facing our country.
Online lenders, on the other hand, often design more accommodating packages for individuals who might typically be deemed “high-risk borrowers.” Nonetheless, it’s important to note that these lenders generally impose higher interest rates to compensate for the increased risk of loan defaults they encounter.
To identify the most suitable car loan for your needs, it’s crucial to first assess your specific requirements and financial capacity. This will enable you to approach the right financier with a clear understanding of what you’re looking for. With this in mind, let’s delve into some of the leading lenders across the three categories: non-bank lenders, SACCOs, and banks, highlighting those that offer the most competitive rates and favorable terms.
Non-Bank Car Financing Companies
Often known as online lenders, these entities are termed “non-bank” because they are not licensed by the Central Bank of Kenya (CBK) to operate as full-fledged banking institutions. However, they are properly licensed to offer various financial services such as logbook loans, emergency loans, and insurance premium financing, among others.
1. WATU Credit
Established in 2015, WATU Credit has rapidly expanded to become a leading provider of financial services to underserved communities in Kenya.
What stands out about WATU is its adaptable approach to car financing. The company offers up to 80% financing based on the market value of your desired vehicle. For example, if you’re purchasing a Toyota Probox valued at KES 1,300,000, WATU can finance up to KES 1,040,000.
The cost of a loan with WATU is 2.5% per month, which equates to approximately 30% annually. Therefore, a loan of KES 1,000,000 over a period of 36 months would result in a monthly payment of around KES 51,000, including loan processing fees and insurance costs.
2. HAKKI Africa
HAKKI is another non-bank entity that provides support for car financing, with its origins tracing back to Japan.
Their approach differs slightly from WATU, as they necessitate that you procure your vehicle exclusively from Japan through a company named Beforward. This can be seen as a limitation since it narrows down your choices, and you also need to wait for the car’s arrival.
On a brighter note, HAKKI presents some highly attractive financial offerings. You are only required to make a minimum initial payment of 10% or KES 100,000.
The company’s car loans are competitively priced, with interest rates averaging around 23% per annum or 1.9% per month.
3. MOGO
Originating from Europe, MOGO has been offering financial services in Kenya since 2018 as a part of the Eleving Group.
What sets MOGO apart is their outstanding customer support. They consistently demonstrate a commitment to providing high-quality financial products tailored to borrowers’ needs.
Their car financing option allows you to borrow up to KES 2,500,000 with a repayment period of up to 60 months.
To give you an idea, if you take out a loan of KES 2,000,000 for a car, you’ll need a deposit of KES 400,000. Assuming you opt to repay the loan over 36 months, your monthly payment would be KES 108,000. This amounts to an interest rate of approximately 3% per month or 36% per annum.
MOGO stands out for its premium, hassle-free services and a low-price guarantee, ensuring you receive the best value for your investment.
SACCOs That Can Help Your Car Ownership Dreams Come True
While non-bank financial institutions offer valuable services, their loan rates can be quite high. If you can save and can afford to wait a few months, SACCOs could be a more favorable option for you. Below are some top-performing SACCOs in Kenya that provide car loans.
1. Stima SACCO
Initially established to serve the employees of what was then known as the East Africa Power & Lightning Company, Stima SACCO has been operational since the 1970s.
Fast forward to today, and Stima SACCO has opened its doors to the general public. If you’re someone who’s willing to save diligently over a period before purchasing your car, this could be an ideal place to safeguard your funds.
To be eligible for a loan, you only need to be a member of the SACCO for a minimum of three months. Their loans come with an interest rate of 12.75% per annum on a reducing balance basis. Members can borrow up to three times the amount of their savings, with a repayment period extending up to 36 months.
For those without a guarantor, Stima SACCO offers a self-guarantee option, allowing you to use collateral to secure your loan.
In terms of customer support, we’d give Stima SACCO an above-average rating. They were prompt in responding to all our inquiries, typically within 24 hours, demonstrating their commitment to efficient and reliable service.
2. Safaricom SACCO
Founded in 2001, Safaricom SACCO initially catered exclusively to the employees of Safaricom PLC. However, as the SACCO expanded, it opened its doors to the general public, allowing individuals like you and me to become members.
At Safaricom SACCO, you’re required to save for a minimum of six months. After this period, you’re eligible to receive a loan amounting to three times your savings. For instance, if you’re aiming to purchase a car worth KES 1,000,000, you would need to save at least KES 333,000 within six months, which breaks down to about KES 55,500 per month.
One of the advantages of a loan from Safaricom SACCO is that no guarantors are required. Instead, the car’s logbook serves as security for the loan.
Safaricom SACCO offers car loans at competitive rates, with interest as low as 12% per annum on a reducing balance basis.
The SACCO is known for its excellent and responsive customer support team. Moreover, based on our research, their loans are among the most attractively priced in the market.
3. Waumini SACCO
Waumini SACCO, established in 1980, stands as one of the country’s most longstanding Savings and Credit Cooperative Societies. Though it has ties to the Catholic Church, the SACCO welcomes members from all religious backgrounds.
At Waumini, members are required to save for six months before they can borrow up to four times their saved amount. This means that to secure a loan of KES 1,000,000, you would need to save KES 250,000. For asset financing, such as car loans, the SACCO may use the car’s logbook as collateral or ask for a guarantor.
The interest rates for their loans start from 14% per annum, calculated on a reducing balance basis.
While Waumini SACCO offers excellent products, there is room for improvement in their responsiveness to customer inquiries. Nonetheless, they remain a commendable SACCO with valuable offerings.
Banks Offering Attractive Auto Financing Options
Traditionally, banks have been the preferred choice for individuals seeking loans to fulfill their aspirations. If you satisfy their criteria, working with banks can be advantageous, as top-notch professionals in the industry typically manage them. When exploring the best car financing companies in Kenya, some banks to consider include:
1. NCBA Bank
NCBA Bank emerged from the merger of NIC and CBA banks, establishing itself as one of Kenya’s largest banks by asset size. The bank is known for its welcoming and accommodating approach to borrowers, setting it apart from some larger institutions that may not be as receptive to those from the informal sector.
Obtaining a car financing loan from NCBA is straightforward, provided you can furnish bank or MPESA statements demonstrating your capacity to repay the loan.
What makes this one of the top car loan options in Kenya is the favorable interest rate of 18.1% on a reducing balance. This means the cost of the loan decreases over time as you consistently make repayments, effectively reducing the principal amount.
2. ABSA Bank Kenya
ABSA Bank Kenya, formerly known as Barclays Bank of Kenya, has undergone a transformation to better support entrepreneurs and MSMEs. Among its offerings, the car loan product stands out with its flexible terms and competitive rates.
For those looking to finance a new car, ABSA offers up to 95% financing with a repayment period of up to 72 months. Additionally, customers can enjoy a one-month repayment holiday and an optional credit card with a limit of up to KES 300,000. The bank also provides 100% insurance premium financing for added convenience.
For second-hand car financing, ABSA provides up to 75% financing, with up to 100% financing available for selected car models. The repayment period extends up to 48 months, and 100% insurance premium financing is also available. It’s important to note that the second-hand car model should not be older than 7 years.
This range of options makes ABSA’s car loan product especially attractive for small business owners or individuals with moderate to low-income jobs, offering a path to vehicle ownership that accommodates various financial situations.
3. Standard Chartered Bank
Commonly referred to as Stan Chart, this bank is a subsidiary of a British financial institution headquartered in London. Car financing is a standout among its diverse financial offerings, with rates as of September 2023 at 16% per annum.
The bank finances up to 80% of your car purchase, requiring you to cover the remaining 20%. Business owners must have a minimum of three years of operation to qualify for a loan.
4. Equity Bank of Kenya
Equity Bank of Kenya is one of the most esteemed banking institutions in the country. Originally starting as a modest coffee SACCO in central Kenya, it has evolved into a household name, boasting a vast network of branches nationwide.
For those considering a car loan, Equity Bank’s risk-profile-based lending approach is noteworthy.
As of late September 2023, their lowest interest rate for low-risk borrowers was 14.69%, with rates potentially reaching up to 21% per annum depending on your risk profile. To determine your eligibility and interest rate, a visit to one of their branches is required.
5. Diamond Trust Bank
Diamond Trust Bank (DTB) stands out among Kenya’s premier car financing institutions for several reasons. Established in 1946, DTB has a long-standing reputation for reliability and trustworthiness.
One of the bank’s strengths is its range of innovative financial products designed to accommodate borrowers with varying risk profiles.
Notably, DTB collaborates with Toyota Kenya, making it an ideal choice for those interested in purchasing a brand-new vehicle with no mileage. Additionally, individuals looking to import pre-owned cars can take advantage of the bank’s “Hire Purchase” program, which offers an interest rate of 16% on a reducing balance.
How To Choose The Right Car Loan Provider
Car financing options are diverse, encompassing a wide range of entities. To choose the best fit for your needs, consider several key factors, including:
1. Your Financial Stability
You may not need to worry much about your risk profile if you’re employed in a stable position with a substantial income. However, for those building their careers or businesses from the ground up, it’s crucial to assess your ability to repay the loan before approaching any lender. New entrepreneurs might find more flexible options with non-bank lenders like MOGO and WATU, while established business owners with steady cash flow might secure better rates with SACCOs or banks.
2. Interest Rates
The interest rate is a critical factor as it determines the cost of borrowing. Aim for a lender that offers the lowest interest rates, ideally on a reducing balance basis, to minimize the overall cost.
3. Additional Fees
Be aware of any extra charges beyond the interest rate, such as loan processing or negotiation fees. It’s essential to inquire about these upfront to avoid surprises.
4. Customer Service
Opt for a lender that values you as a client, responds promptly to your inquiries, and treats you with respect. A positive relationship with your lender can make a significant difference in your borrowing experience.
Conclusion
Securing the best car financing deals in Kenya involves more than just a basic understanding. Fortunately, we’ve undertaken the extensive research for you, enabling you to concentrate on establishing a positive relationship with your chosen lender. This approach ensures you can effortlessly acquire your dream car and revel in the freedom and convenience of smooth drives along Kenya’s roads.
Once you’ve acquired your dream vehicle, don’t forget to maintain it properly to ensure its longevity and your enjoyment. Enhancing your car’s interior with accessories like ignition covers, floor mats, and vacuum cleaners can not only keep it clean and organized but also add a personal touch to your driving experience.
