A bank car loan is almost always cheaper than a non-bank logbook loan in Kenya. A Kenyan bank car loan runs at 13 to 17 percent per year (effective APR 14 to 19 percent). A non-bank logbook loan runs at 3 to 5 percent per month reducing balance, or an all-in effective APR of 40 to 80 percent once arrangement fees, valuation, chattels registration and insurance are layered in. That is three to five times the bank rate.
Logbook loans still exist because they fill three gaps banks refuse: (1) speed (1 to 2 working days versus 1 to 4 weeks), (2) documentation (light KYC versus full income proof and credit history), and (3) age (banks cap vehicle asset finance at 8 years, non-bank lenders go to 15).
Worked example
Borrow KES 500,000 against a car valued at KES 1,100,000 for 12 months.
| Line item | Logbook loan (non-bank) | Bank car loan |
|---|---|---|
| Principal | KES 500,000 | KES 500,000 |
| Interest, 12 months | ~KES 130,000 (4% p/m reducing) | ~KES 40,000 (15% p/y reducing) |
| Arrangement fee | KES 15,000 (3%) | KES 5,000 (1%) |
| Valuation + chattels | KES 12,000 | KES 12,000 |
| Total repayable | ~KES 657,000 | ~KES 557,000 |
| Cost of credit | ~KES 157,000 | ~KES 57,000 |
The bank saves you roughly KES 100,000 on this ticket. The bank also takes weeks not days.
When a logbook loan is actually right
- Same-day cash need against a car you already own.
- Informal or seasonal income the bank will not underwrite.
- Vehicle older than 8 years (past most bank cut-offs).
- Credit history impaired but recovering (arrears cleared, still on CRB watchlist).