Reducing Balance
Flat Rate
SACCO Loan
Monthly Repayment
Loan Amount
Total Interest
Total Repayment
Effective Annual Rate

Reducing Balance vs Flat Rate Loans

Reducing balance (used by banks and most SACCOs): interest is calculated on the outstanding balance each month, so interest reduces over time. This is the more borrower-friendly method.

Flat rate (used by some microfinance/mobile lenders): interest is calculated on the original principal for every month of the loan. The effective rate is roughly double the quoted flat rate.

Frequently Asked Questions

What interest rates do Kenyan banks charge?

Most Kenyan commercial banks charge 13–18% p.a. on a reducing balance basis. SACCOs typically charge 1% per month (12% p.a.) on a reducing balance. Mobile lenders and microfinance charge higher flat rates.

What is the SACCO loan limit?

Most SACCOs lend up to 3× or 5× your total share deposits. Some SACCOs go up to 10× for long-standing members. Check with your SACCO for their specific multiplier.