What are payday loans
Payday loans in Kenya are short-term, high- cost loans that are typically intended to cover a borrower’s expenses until their next payday they are also known as cash advance loans.
How it operates;
To apply for a payday loan in Kenya, a borrower needs to provide identification, proof of income, and a bank account. Some lenders may also require post-dated checks or authorization to debit the borrower’s bank account.
2. Loan Amount:
The borrower requests a specific loan amount, which is typically a percentage of their regular income. However, payday loans often come with high interest rates and fees, so it’s important to borrow only what is necessary. Visit www.rg.co.ke to request for a loan.
Payday loans in Kenya lenders usually have less strict requirements compared to traditional lenders, making the approval process relatively quick. They typically evaluate the borrower’s income and verify their employment status. A credit check may not be necessary, or poor credit history may not be a significant factor in the decision.
4. Repayment Terms:
Payday loans are designed to be repaid within a short period, often within a few weeks or until the borrower’s next payday. The repayment terms are agreed upon during the loan application process. The borrower provides a post-dated check or gives the lender authorization to withdraw the loan amount, including fees and interest, directly from their bank account on the due date.
5. Fees and Interest:
Payday loans in Kenya are known for their higher fees and interest rates than traditional loans. The fees are typically a fixed amount per borrowed sum, and the interest is often stated as an annual percentage rate (APR). It’s crucial to review and understand the terms, fees, and interest rates associated with the loan before accepting the funds.
6. Rollovers and Extensions:
If a borrower is unable to repay the loan on time, some lenders may offer extensions or rollovers. This involves extending the due date in exchange for additional fees. However, this can lead to a cycle of debt and increase the total amount owed.
7. Consequences of Non-Payment:
Failing to repay a payday loan can result in additional fees, increased interest rates, collection calls, or even legal action. It can also adversely affect the borrower’s credit score.
Note that payday loans are often considered a high-cost form of borrowing and should be used with caution. If possible, exploring alternative options, such as negotiating payment plans with creditors may be advisable. For more information about payday loans and other loans visit www.money254.co.ke