Car logbook loans have rapidly emerged as a convenient and accessible financial solution for Kenyan car owners needing fast cash without the hassle of credit checks.
One of the main advantages of logbook loans is how quickly you can access cash compared to the lengthy processes associated with traditional loans.
Although logbook loans can help you quickly get quick finances, it is important to know a few things to make sure you get the best loan service. Here is what you must know before getting a loan
- How much can you borrow?
Lenders use the Forced Sale Value (FSV) of your vehicle to determine the amount you can qualify to borrow against it. The FSV is the amount that your car can be sold for quickly or in auction.
Microfinance institutions (MFIs) offer car logbook loans as a percentage of the value of your car. Most lenders in Kenya offer loans of between 20% to 80% of the value of the car.
Some lenders offer different terms for different cars depending on the make, model, and year of manufacture. For example for Toyotas made between 2005 to 2011, you may find some lenders offering loans of up to 50% of the force value of the car.
Let’s say your car is a newer model 2012 to date and you can get 70% of the FV (forced value). For instance a Toyota Landcruiser TX 2012 worth 5 million, you can get a loan of 3.5 million.
- Upfront Fees & Charges
- Logbook Search
When applying for logbook loans the lender will first need to confirm the ownership of the vehicle. To ascertain this, the lender will require you to pay a Search Fee, most lenders charge Ksh 3000. This is done through the NTSA portal.
Some lenders are very thorough in that, they also conduct searches at KRA (Kenya Revenue Authority) to check if duty has been paid on the vehicle.
An additional search is the E-Citizen search. Microfinance conducts this search to make sure that no other bank or microfinance has an interest in your vehicle.
There are usually no extra costs on the follow-up searches, MFIs charge a constant of Ksh 3000 only.
- Valuation
To check if your car qualifies for a loan, microfinance institutions need to determine the exact value of your car. A valuer will assess your vehicle and give a valuation report that details the market value and the Forced Sale Value of your car.
The valuer may be an in-house or an external valuer, although most lender prefer their own valuer to avoid instances of overvaluation or undervaluation.
The valuation fee ranges from Ksh 2,000 to Ksh 5000 and is paid upfront before the loan approval process. Big commercial vehicles such as lorries and trucks may have a higher valuation charge.
Note: The value of your car depends on many factors such as the condition of the car, its year of manufacture, make & model, and the mileage.
- Comprehensive Insurance is required
Lenders require borrowers to have comprehensive insurance on their vehicles when getting a logbook loan to mitigate potential financial risks.
Comprehensive insurance covers a range of events, including accidents, theft, and damage to the vehicle. With comprehensive insurance, lenders ensure that the vehicle, which serves as collateral for the loan, is adequately protected.
In the event of an accident or unforeseen damage, the insurance provides financial cover, allowing the lender to recover the outstanding loan amount.
In case your car only has basic third-party insurance, you must obtain a comprehensive cover. Most lenders offer Insurance Premium Financing (IPF) to help you pay for comprehensive car insurance.
For example, Ngao Credit offers 80% insurance Premium financing with a repayment period of up to 11 months.
- How Fast Can You Get a Car Logbook Loan
In Kenya, logbook loan lenders are popping up everywhere, offering a quick way to get cash if you own a vehicle. Just find a lender, check if you qualify, and your loan could be approved in as little as 24 hours for speedy help with your finances.
What makes logbook loans even more accessible is that they don’t require credit checks. This means they’re easy for many people to get, making them a straightforward option for those looking for quick and hassle-free financial support.
Note: Some lenders offer loans in less than 6 hours as long as you have all your documents ready.
- Associated Fees
When considering a loan, it is essential to be aware of additional fees beyond the stated interest rate. These may include:
- Processing fees: Typically a one-time payment constituting about 2% of the loan amount.
- NTSA in-charge and discharge fees associated with registering the co-ownership of the logbook between the lender and the owner. This registration process is facilitated through the NTSA to ensure legal clarity regarding the vehicle’s ownership status.
- Car tracker – the car tracker serves as a security measure for the lender. It is installed in the vehicle to monitor its location and movement. In the event of non-payment or default, the tracker aids in locating and recovering the vehicle efficiently.
Notably, certain charges, like processing fees, in-charge and discharge fees, and car tracker installation costs, are similar across all lenders in Kenya.
Final Thoughts
Research and compare rates from different lenders to ensure you are getting a competitive and fair deal that aligns with your financial goals.
Transparent lenders like Ngao Credit prioritize providing clear information about fees and terms, aiming to offer the best experience for their customers.
We are committed to empowering our customers with the knowledge they need to make informed financial decisions. Navigating the world of logbook loans in Kenya is simpler when armed with knowledge.
Choosing a lender with transparent policies is key to a smooth borrowing process.
