How METRIKA calculates this
Reducing balance: monthly repayment M = P × i ÷ (1 − (1 + i)^−n), where i is the annual rate ÷ 12 and n the number of months. Interest is charged only on what you still owe.
Flat rate: total interest = P × rate × years, spread evenly over the term. Interest is charged on the original amount for the whole period.
True APR: METRIKA finds the annual rate at which your repayments equal the cash you actually receive (loan minus upfront fees). This is the number to compare across banks, SACCOs and digital lenders.
What to know in Kenya
The Central Bank Rate was held at 8.75% in October 2026 and average commercial bank lending rates were 14.4% in September 2026, down from 17.2% in November 2024. SACCO loans are often quoted at 1% a month on a reducing balance (about 12% a year). Chama and some microfinance loans are quoted flat, which roughly doubles the effective rate over longer terms.
Under the Banking Act, banks must disclose the total cost of credit before you sign. Ask for it in writing.
Frequently asked questions
What's the difference between flat and reducing balance?
A flat rate charges interest on the original loan amount for the full term. A reducing balance charges interest only on what you still owe, so the same quoted number costs much less.
What does 1% per month mean?
On a reducing balance, 1% a month is about 12.7% a year once compounded. On a flat basis it is about 12% of the original amount every year, which is far more expensive.
What is a safe loan repayment?
A common rule is to keep all debt repayments below 30% of net pay. Many Kenyan employers cap check-off deductions so your take-home stays above a third of basic pay.
Are loan fees part of the cost?
Yes. Processing fees, credit life insurance and excise duty on fees reduce the cash you receive, so they raise the true APR.
What is the Central Bank Rate in Kenya now?
The Central Bank of Kenya held its benchmark rate at 8.75% in August 2026. Banks price most loans above this rate, so changes to it usually feed into loan rates over the following months.
What are average bank loan interest rates in Kenya?
Average commercial bank lending rates were 14.4% a year in September 2026, down from 17.2% in November 2024. Your rate depends on the lender, the loan type and your credit record.
How much can I borrow against my salary in Kenya?
Under the Employment Act, total deductions from your pay, including loan check-offs, cannot exceed two-thirds of your wages. Lenders also set their own affordability limits, so use this calculator to test a repayment before you apply.
Can foreigners get a loan in Kenya?
Some Kenyan banks lend to foreign residents. They usually ask for a work permit, KRA PIN, Kenyan bank account and proof of income, and may set shorter terms or bigger deposits. Terms vary by lender.
Are mobile loans like Fuliza, M-Shwari and Tala expensive?
Mobile loan fees can look small because the loans are short, but the yearly cost can be very high. Enter the amount, fee and term here to see the true yearly rate before borrowing.
What is a CRB listing?
Credit Reference Bureaus such as Metropol, TransUnion and Creditinfo record how you repay loans. Late payments can be reported and may make future loans harder or more expensive to get.
Sources
- Central Bank of Kenya — Central Bank Rate
- Central Bank of Kenya — Monetary Policy Committee decisions
Links are for reference only. METRIKA is independent and not affiliated with or endorsed by these organisations.
Rates checked 6 Nov 2026. METRIKA gives estimates, not financial or tax advice.