The loan you were offered
Flat: interest on the full amount for the whole term. Reducing: interest only on what you still owe. Not sure? Ask the lender which one; it is the biggest difference in cost.
Processing, appraisal, legal and insurance charges, and any duty on them, as your loan offer lists them.
What it really costs
True yearly rate, all costs in
24.9%
Quoted as 14% a year flat. Compounded, 28.0%.
- You pay each month
- KES 9,500
- You receive
- KES 100,000
- Interest
- KES 14,000
- Fees
- KES 0
- You pay back in total
- KES 114,000
- The loan costs you
- KES 14,000
The same KES 100,000 over 12 months at the banks’ average lending rate (14.40% a year, reducing, CBK, September 2026), before fees
KES 7,971 in interest, KES 8,998 a month. Your offer costs KES 6,029 more.
Month by month
| Month | Payment | Interest | Still owed |
|---|---|---|---|
| 1 | 9,500 | 1,167 | 91,667 |
| 2 | 9,500 | 1,167 | 83,333 |
| 3 | 9,500 | 1,167 | 75,000 |
| 4 | 9,500 | 1,167 | 66,667 |
| 5 | 9,500 | 1,167 | 58,333 |
| 6 | 9,500 | 1,167 | 50,000 |
| 7 | 9,500 | 1,167 | 41,667 |
| 8 | 9,500 | 1,167 | 33,333 |
| 9 | 9,500 | 1,167 | 25,000 |
| 10 | 9,500 | 1,167 | 16,667 |
| 11 | 9,500 | 1,167 | 8,333 |
| 12 | 9,500 | 1,167 | 0 |
On a flat rate the interest stays the same every month, even as what you owe falls.
Same number, different loan
14% flat is not 14%
| KES 100,000 over | Interest at 14% reducing | Interest at 14% flat | True yearly rate of 14% flat |
|---|---|---|---|
| 6 months | 4,123 | 7,000 | 23.6% |
| 12 months | 7,745 | 14,000 | 24.9% |
| 24 months | 15,231 | 28,000 | 24.9% |
| 36 months | 23,039 | 42,000 | 24.4% |
KES, no fees. The true yearly rate is the monthly rate that matches what you receive with what you repay, times 12 (the usual APR convention). The banks’ average lending rate, 14.40% in September 2026, is from the Central Bank of Kenya.
Before you sign
Four questions for the lender
- Is the rate flat or on the reducing balance?
- What fees come off at the start, and what is added each month?
- What is the APR, all charges included?
- What happens if I repay early, or pay late?
Also see
More on what money costs
Information, not advice. Your loan agreement decides what you owe.
Quick answers
Questions people ask
- What is the difference between a flat rate and a reducing balance rate?
- A flat rate charges interest on the full amount for the whole term, even as you repay. A reducing balance rate charges interest only on what you still owe. On KES 100,000 over 12 months, 14% flat costs KES 14,000 in interest; 14% reducing costs KES 7,745. The flat loan's true yearly rate is about 24.9%.
- Is 1% a month the same as 12% a year?
- Only on a reducing balance. At 1% a month flat, KES 100,000 over 12 months costs KES 12,000 in interest, a true yearly rate of about 21.5%.
- How do fees change what a loan costs?
- Fees taken at the start mean you receive less than you borrowed but repay the full amount; fees added each month raise every payment. The calculator counts both in the true yearly rate, so two offers with different fees can be compared on one number.