Car loans in Kenya explained: asset finance, hire purchase, SACCO and logbook loans, deposits, tenors, 2026 rates, documents and a worked repayment example.
Figures checked on 29 October 2026.
Buying a car on credit in Kenya usually means bank asset finance, hire purchase, a SACCO loan or a logbook loan. They cost very different amounts. Here is how each works, what banks ask for, and a monthly-payment example you can redo with your own numbers.
The four main options
| Option | Who lends | How it works |
|---|---|---|
| Asset finance | Banks | The bank pays the seller and you pay a deposit. The car is the security and is registered with the bank's interest until you finish paying. |
| Hire purchase | Banks, dealers, finance firms | You pay in instalments and own the car after the last payment. The Hire Purchase Act protects you. |
| SACCO loan | Your SACCO | The amount is usually tied to your savings and your guarantors. Some SACCOs also take the logbook as security. |
| Logbook loan | Microfinance and other lenders | You borrow cash against a car you already own. It is not a way to buy a car, and it is expensive. |
Asset finance
The lender's interest is recorded with NTSA. Asset-finance "in-charge" and "discharge" both generate an eLogbook (The Kenya Times, June 2026), so once you finish paying, the record is updated to you.
Hire purchase
Hire purchase has one useful protection. According to the Business Registration Service, once you have paid two-thirds of the hire-purchase price, the owner can take the goods back only through the courts. Agreements above the statutory price limit fall outside these protections, so read your contract.
SACCO loans
SACCOs usually lend a multiple of your savings, backed by member guarantors. One SACCO's rules cap each guarantor at their own deposits (Wataalamu SACCO loan form). Terms vary, so get your SACCO's current policy in writing.
Logbook loans: understand the cost first
Business Daily reported marketed logbook-loan rates of 3.1% to 5% per month from microfinance lenders. Once all costs were included, a KES 100,000 loan worked out at an APR of about 40% to 99%. Lenders typically advanced 50% to 80% of the car's forced-sale value. Upfront costs can include search, valuation, NTSA, tracker and processing fees (Business Daily, 2023). If you default, the lender can repossess and sell the car.
Here is how the costs compare. A KES 300,000 loan over 12 months at 4% a month costs about KES 31,966 a month, or KES 83,588 in interest. The same loan at 14% a year costs about KES 26,936 a month, or KES 23,234 in interest. The Central Bank of Kenya has widened its licensing of non-deposit-taking lenders. Ask any lender for its licence and check it on the CBK website.
Deposits, tenors and car age: what banks publish
From each bank's own pages on the date we checked. Terms change often, and your offer depends on your income, the car and a credit check.
| Bank / product | What the bank's page says |
|---|---|
| Co-op Bank asset finance | Up to 80% financing for new and second-hand assets. Repayment up to 72 months. Insurance premium financing available. |
| KCB personal car loan | Repayment up to 72 months. Open to salaried and self-employed people. You need a KCB account held for at least 3 months. |
| KCB diaspora asset finance | Up to 60% financing. Used cars up to 24 months, new cars up to 36 months. Used cars must be no older than 8 years. |
| NCBA car loans | New cars, or pre-owned cars up to 8 years old. |
Some banks run deals with new-car dealers that finance up to 100%. One example is Equity Bank's partnership with Inchcape Kenya on BMW, Jaguar and Land Rover (HapaKenya, June 2026). These deals apply only to the named dealers and brands. For an ordinary used car, plan for a deposit of at least 20%.
Some lenders measure car age at the end of the loan. NCBA's logbook loan, for instance, requires the car to be no more than 15 years old from its year of manufacture when the loan is repaid. Ask your bank how it counts.
Interest rates in 2026
The Central Bank Rate is 8.75%, unchanged at the Monetary Policy Committee meeting of 7 October 2026. CBK reported that average commercial bank lending rates were 14.4% in September 2026, up from 14.3% in August (CBK MPC press release).
Under CBK's revised pricing model, variable-rate shilling loans are priced as KESONIA (the Kenya Shilling Overnight Interbank Average) plus a premium ("K") set by each bank (CBK). In practice, your rate can move during the loan, and the premium depends on your risk profile.
Khusoko reported these July 2026 averages from CBK data. They cover all of each bank's loans, not car loans:
| Bank | Average lending rate, July 2026 |
|---|---|
| Co-operative Bank | 15.10% |
| Equity Bank | 14.83% |
| KCB Bank | 14.79% |
| NCBA Bank | 14.64% |
| I&M Bank | 13.68% |
| Stanbic Bank | 11.97% |
Source: Khusoko, September 2026. Before you sign, ask each lender for the APR and the total cost of credit on your specific loan.
Insurance and tracking
- Comprehensive insurance is standard for financed cars, for the whole loan period. KCB's diaspora product, for example, asks for a signed letter committing you to pay comprehensive insurance for the full term.
- Premium financing (paying insurance in instalments) is offered by Co-op Bank and NCBA.
- A tracking device may be required. KCB lists a "tracking invoice (where applicable)". Ask whether you pay for the tracker and how much the subscription costs.
Documents you will need
If you are salaried
- National ID or passport, and your KRA PIN certificate
- Latest payslips; some banks also want an employment letter
- Bank statements for the last 6 months
- A proforma invoice or sale agreement from the seller, and a valuation report for a used car
If you run a business or company
- Certificate of incorporation or business registration, plus the memorandum and articles of association
- Company KRA PIN and the directors' IDs
- Bank statements for 6 months; I&M asks for 12 months if your business is seasonal
- Audited accounts: I&M asks for at least 2 years where applicable, and Co-op asks for them on loans above KES 10 million
- A board resolution to borrow
Sources: I&M application form, Co-op Bank and KCB (which also asks for a clean CRB report).
Worked example: your monthly payment
Banks usually work out a fixed monthly instalment on a reducing balance using this formula:
M = P × r × (1 + r)n ÷ ((1 + r)n − 1)
Here P is the amount borrowed, r is the annual rate divided by 12, and n is the number of months.
Example: a car at KES 2,000,000, with a 20% deposit of KES 400,000. You borrow KES 1,600,000 at 14% a year over 48 months.
- r = 0.14 ÷ 12 = 0.011667
- Monthly payment: about KES 43,722
- Total repaid: about KES 2,098,673, of which about KES 498,673 is interest
| Loan of KES 1,600,000 | Monthly payment | Total interest |
|---|---|---|
| 14%, 36 months | KES 54,684 | KES 368,631 |
| 14%, 48 months | KES 43,722 | KES 498,673 |
| 14%, 60 months | KES 37,229 | KES 633,752 |
| 12%, 48 months | KES 42,134 | KES 422,439 |
| 16%, 48 months | KES 45,344 | KES 576,534 |
These figures assume the rate never changes and leave out fees, valuation, insurance and tracking. A longer loan lowers the monthly payment but raises the total interest.
Tips before you sign
- Get approval in principle before paying a seller a deposit.
- Compare APR and total cost of credit, not the headline rate.
- Budget for yearly comprehensive insurance on top of the instalment.
- Check the car fits the bank's age limit at the end of the loan.
- The bank's valuation may be lower than the price; know who covers the gap.
- Read the early-repayment and late-payment terms.
MNM Motors is a Nairobi dealer, not a lender. We point buyers to bank and asset finance, and our own mechanic inspects the cars we sell. You can also bring your own mechanic before paying. To talk through a car you want to finance, contact us; we usually reply on WhatsApp in about 30 minutes.
Questions buyers ask
How much deposit do I need for a car loan in Kenya?
For a standard bank loan, plan on at least 20%. Co-op Bank, for example, publishes financing of up to 80%. Higher financing usually comes only through specific new-car dealer deals.
What interest rate will I pay?
It depends on your risk profile and the bank. For context, CBK reported an average bank lending rate of 14.4% in September 2026. Ask for the APR on your actual offer.
Who owns the car while I am paying?
You use the car, but the lender's interest stays on the NTSA record until the loan is cleared and discharged.
Is a logbook loan a good way to buy a car?
No. It is borrowing against a car you already own, at reported costs of several percent a month. Asset finance or a SACCO loan is usually cheaper.
Will banks finance an older used car?
Often only up to a set age. NCBA, for example, publishes 8 years for pre-owned cars on its car loans. Check the age rule and how it is measured before you choose a car.
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