📚 Financial Glossary Kenya

The total yearly cost of borrowing expressed as a percentage. Includes interest, fees, and all charges. The most important metric for comparing loan offers in Kenya.

Kenya's central bank responsible for monetary policy, bank regulation, and financial stability. Supervises commercial banks, microfinance banks, and the credit reference bureau framework.

Institutions licensed by CBK to collect and share credit information. TransUnion, Metropol, and Creditinfo are Kenya's three CRBs. Lenders check your CRB report before approving loans.

A numerical score (200-900) indicating your creditworthiness based on repayment history, existing loans, and financial behavior. Higher scores lead to better loan terms.

Loan applied for, eligible after assessment, and transferred entirely via mobile phone. Popular platforms include M-Shwari, KCB M-Pesa, Tala, Branch, and Zenka. Amounts from KES 500 to KES 70,000.

Kenya's leading mobile money platform operated by Safaricom. Used for loan fund transfer and repayment by virtually all digital lenders. Over 30 million active users.

Bank licensed by CBK to provide banking services to low-income populations. Offers smaller loans with more flexible requirements than commercial banks.

Previously, Kenya capped commercial bank lending rates at provider-stated rateabove CBK base rate (2016-2019). The cap was repealed in 2019. Digital lenders are not subject to the same regulations.

One-time upfront charge for processing a loan application. Typically provider-stated rateof the loan amount. Must be disclosed before loan acceptance under CBK guidelines.

Additional charges for missing a repayment deadline. Varies by lender — typically provider-stated rateof overdue amount per day/week. Reported to CRB after 90 days.

Extending a loan's due date by paying fees and renewing the loan. Common with mobile loans. Increases total cost significantly — avoid if possible.

Member-owned financial cooperative offering savings and loan products. Regulated by SASRA. Typically offers lower rates than commercial lenders (provider-specific annual rate.).

SACCO Societies Regulatory Authority. Government body overseeing deposit-taking SACCOs in Kenya. Ensures SACCOs follow prudential regulations.

Loan backed by collateral (property, vehicle, savings). Lower interest rates because the lender has reduced risk. If you default, the lender can seize the collateral.

Loan without collateral, eligible after assessment based on income, credit history, and financial behavior. Higher interest rates than secured loans. Available from KES 5,000 to KES 5,000,000.

Loan secured against your vehicle's logbook (registration document). You keep driving the vehicle but the lender holds the logbook until full repayment.

Short-term loan based on your expected salary. Repaid from next paycheck. Available through employers, banks (check-off loans), and digital platforms.

Loan repayment method where installments are deducted directly from your salary by your employer before payment. Common for SACCO and bank loans in Kenya.

The actual transfer of loan funds to the borrower. In Kenya, typically via M-Pesa, bank transfer, or cheque. Digital loans are usually transferred within minutes.

A loan where the borrower has missed payments for 90+ days. Reported to CRB and significantly damages your credit score. Makes future borrowing difficult.

CBK-mandated system requiring all regulated lenders to share borrower information with CRBs. Positive and negative data is shared to build comprehensive credit profiles.

Industry body representing licensed digital lenders. Members commit to fair lending practices, transparent pricing, and responsible data use.

Regulations issued by CBK for banks and financial institutions covering lending practices, risk management, and consumer protection.

Agreement with your lender to change loan terms (lower rate, longer period) when facing financial difficulty. Better than defaulting — preserves your CRB score.

The official currency of Kenya. All domestic loans are denominated in KES. Exchange rate fluctuations don't affect local loans.