How to Read Loan APR & Total Cost
Digital loans in Kenya are quoted in many confusing ways. Here's how to cut through it and find what a loan actually costs you.
Look at the total you repay, not the headline rate
A "15% a month" loan and a "10% processing fee" loan can cost the same — or wildly different — once you add fees and excise. The honest number is the total amount you hand back.
Use representative APR to compare across tenures
APR annualises the all-in cost so a 30-day loan and a 12-month loan sit on one scale. A 10% charge over 7 days is far pricier than 10% over a year — APR makes that visible.
Count every fee
Interest is only part of it. Add processing/facilitation fees, and the 20% excise duty Kenya charges on those fees. Late and rollover fees can dwarf the original cost.
Check the CBK licence
Only borrow from digital lenders on the Central Bank of Kenya Digital Credit Providers (DCP) register. Unlicensed apps are not bound by CBK consumer protections.
Worked example
Borrow KES 5,000 for 30 days at a 9% facilitation fee. Fee = KES 450, plus 20% excise (KES 90) = KES 540 cost. You repay KES 5,540 — a representative APR of about 131%. The same fee over 7 days would be an APR near 560%.
Compare real lenders side by side, ranked by what they actually cost.