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Banks In Kenya With The Most Expensive Loans

By Isaac Blessings

Borrowing a bank loan to buy a plot, a car, pay medical bills, build a house or for other purposes is not something new in Kenya. One of the factors most people consider before taking a loan is the interest rate which occasionally determines the amount of money they borrow. These interest rates vary from one bank to another depending on different charges such as negotiation fee, credit life insurance and appraisal fee. In this article, we highlight some of the banks with the most expensive loans in Kenya.

Kindly note that the estimate provided is not a loan contract, if you are interested in a bank loan you should contact the bank directly.

Family Bank

Family Bank has the most expensive loans in Kenya with an annual percentage rate (APR) of 33.3 percent. A borrower applying for a Ksh 1 million personal secured loan to be repaid in a period of 12 months will currently cost them Ksh 170,687 up from Ksh 115,624 that the bank was charging in March last year. The cost is made up of a Ksh 71,807 interest, Ksh 30,000 processing fee, Ksh 60,000 credit life insurance, Ksh 2,400 service fee and Ksh 6,480 as excise duty fees. The total cost of acquiring the loan is twice the amount of getting a similar loan at the Bank of Baroda despite the difference in interest rates being just 0.18 percent. The same loan at Victoria Commercial Bank at an interest rate of 13 percent will cost Ksh 83,807 which is Ksh 86,880 less than at Family Bank. This is because the interest charges at Family Bank are 8.24 times those of Victoria Commercial Bank.

Also Read: Family Bank CEO Rebecca Mbithi Biography, Education and Career 

ABSA Bank

ABSA Bank ranks second in the list of the banks with the most expensive loans in Kenya. This is according to the information developed on the website of the Kenya Bankers Association (KBA) and the Central Bank of Kenya aimed at increasing transparency and boosting competition in the Banking sector. A borrower taking a 1 million shillings personal secured loan repayable in 12 months from the bank will incur a total cost of Ksh 143,007. The total credit cost is Ksh 71,807 interest, Ksh 33,000 negotiation fees, Ksh 25,000 legal fees, Ksh 6,600 credit life insurance and Ksh 6,600 for the excise duty cost. The bank has an Annual Percentage Rate (APR) of 22.1 percent.

Sidian Bank

The Sidian Bank followed up closely in the list according to the Kenya Bankers Association’s website. The bank has an interest rate of 13%, appraisal and disbursement fees of 3% and a Ksh 1,000 as registration fees. If a client takes a Ksh 1 million personal secured loan to be repaid within a period of 12 months they will incur a total cost of 140,807 Kenyan shillings.

Also Read: How To Become A KCB Bank Agent

Ecobank

The report by the Central Bank of Kenya in conjunction with the Kenya Bankers Association ranked Ecobank as the third most expensive loan bank in Kenya. The bank which was named as the ‘Best Bank in Africa 2020’ by the African Bank has a 12% interest rate. A client borrowing a 1 million personal secured loan repayable within 12 months will pay a Ksh 121,407 extra cost. The cost is broken down into a Ksh 75,357 interest, Ksh 30,000 application fee, Ksh 10,050 insurance cost and Ksh 6,000 as excise duty fees.

StanChart Bank

The Standard Chartered Bank of Kenya also found its way in the list of banks with the most expensive loans in Kenya. The bank has an interest rate of 11.49% with a processing fee of 2.25% and a 5% principal fee as of 2022. A client borrowing a Ksh 1 million personal secured loan repayable within a period of 12 months will incur a total fee of Ksh 115,000/=

Equity Bank

Contrary to many people’s expectations, the famous Equity Bank was also among the list of banks with the most expensive loans. Equity Bank has an Annual Percentage Rate (APR) of 20.08 percent. A borrower applying for a Ksh 1 million personal secured loan to be paid in 12 -months’ time will incur a total cost of Ksh 108,057/=. According to the information by Kenya Bankers Association (KBA) at least 70% of deposits to Equity Bank do not attract interest. In fact Equity once revealed that the cost of its Ksh 691 billion as at the end of September 2020 was at 2.2 percent down from 2.4 percent in September 2019.

Also Read: Equity Bank CEO James Mwangi Biography, Age, Education, Career, Family, Philanthropy and Net Worth

Stanbic Bank

Stanbic bank was ranked 7th by the Central Bank of Kenya (CBK) and Kenya Bankers Association in the list of the banks with the most expensive loans. The bank has a staggering 13 percent interest rate and a 20.1 percent Annual Percentage Rate (APR). If you apply for a personal and secure loan worth Ksh 1 million to be repaid within a period of 12 months, you will incur a total cost of Ksh 105,470/=

Co-operative Bank

Co-operative bank which has a 13 percent interest rate and a 0.39% disbursement fee also joins the list of Banks with the most expensive loans. Taking a Ksh 1 million personal and secured loan to be repaid within 12 months will cost the borrower a total of Ksh 101,849/=.  However, Co-operative Bank has in recent years revealed that at least 70 percent of their deposits do not attract interest.

Bank of Africa

The bank of Africa also found its way in the list of the most expensive bank loans in Kenya as of 2022. It has an interest of up to 5 percent per annum paid to the savings account and up to 2.5 percent to the business accounts. A client applying for a personal and secured loan worth Ksh 1 million to be paid within a period of 12 months will incur a total cost of Ksh 105,185/=.

GT Bank

GT Bank closes the list of the top ten banks with the most expensive loans as released by the Kenya Bankers Association (KBA) in partnership with the Central Bank of Kenya (CBK).  The bank has a 1.15 percent interest rate per annum and a 1.33% interest rate to loans payable within 6 months. Borrowing a Ksh 1 million personal secured loan to be repaid in a span of 12 months will have you incur a total cost of Ksh 101,807/=.

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