Buying a car is a major investment that requires significant financial planning. Not everyone has the cash to pay for a car upfront, and this is where car financing comes in. Car financing options in Kenya are diverse, ranging from bank loans to hire purchase agreements.

Each financing option has its advantages and disadvantages, and it’s important to weigh them carefully before making a decision.

In this article, we’ll take a look at the top car financing institutions and compare their offerings to help you make an informed decision.

Why Choose Car Financing Options?

Well, car financing provides an opportunity to own a car without paying the full amount upfront. This means you can spread the cost of buying a car over an extended period, making it more affordable.

With car financing options, you can choose a repayment period that suits your budget and financial goals. It also allows you to access higher-end cars that would otherwise be out of your budget range.

Factors to Consider Before Opting for Car Financing With any Institution

Before settling on a car financing option, you need to consider several factors, including:

• Interest Rates: Different institutions charge different interest rates on their loans. Be sure to compare the interest rates to get the best deal.
• Repayment Period: This is how long it will take you to clear the loan. Choose a repayment period that is within your budget.
• Loan Amount: This determines the type of car you can afford. Choose a financing option that can cover more than 90% of the cost of the car you want to buy.
• Additional Charges: Some car financing options may include additional charges, such as insurance or processing fees. Factor in these additional charges when making your decision.

Top Car Financing Companies in Kenya

In no particular order, here are the top car financing options in Kenya:

1. Equity Bank – Asset Finance

Equity Bank Asset Finance is a financial product that provides loans for purchasing assets for both personal and business purposes. The bank facilitates the purchase of motor vehicles, machinery and equipment by offering loans to customers.

Features

• Offers up to 100% financing.
• The loan amount is determined by the customer’s ability to pay.
• Flexible loan period of up to 60 months for second-hand vehicles and up to 120 months for brand-new vehicles.

Requirements

• Three original latest payslips
• Two copies of ID and PIN certificate
• An Introduction/Appointment/Confirmation letter from the employer or business.

2. Cooperative Bank

Cooperative Bank is another option for car financing in Kenya that offers affordable loans to individuals and businesses.

Features

• Up to 80% financing for new and used vehicles.
• Competitive pricing available in local and foreign currency.
• Flexible repayment period of 60 to 96 months.
• Automatic reminders for insurance expiry.

Requirement

• National identification card
• Vehicle invoices and any other relevant documents related to the car.
• KRA Pin

3. Stanbic Bank

Stanbic Bank offers a highly competitive and flexible financing option called the Vehicle and Asset Finance facility, designed to help individuals and businesses acquire various assets, such as motor vehicles, plants, equipment, and machinery, with ease and convenience.

Features

• Financing Options for Various Assets.
• Competitive Interest Rates.
• Flexible financing terms of up to 60 months.
• Insurance Premium Financing.
• Immediate access to assets.
• No Collateral.

Requirements for Accessing Stanbic’s Vehicle and Asset Finance Facility

• Bank statements for the last six months
• Certified copies of identification documents, such as ID, passport, or certificate of incorporation
• Latest three months’ payslips (for salaried applicants)
• A letter of introduction from the employer (for salaried applicants)
• A copy of the logbook (for used vehicles)

4. NCBA Bank

NCBA Bank is a leading financial institution in the region, offering a wide range of banking products and services to cater to the diverse needs of its customers. One such product is their car financing option, which allows individuals and businesses to purchase vehicles through a convenient and flexible loan arrangement.

Features of NCBA Bank Car Financing

• Flexible repayment terms range from 12 to 60 months.
• Competitive interest rates from 13% PA.
• Up to 100% financing: Depending on the borrower’s creditworthiness.
• Wide range of eligible vehicles.
• Insurance premium financing.

Requirements and Eligibility Criteria

• Applicants must be between 18 and 65 years old.
• Employment status: Both salaried and self-employed individuals are eligible, provided they have a stable source of income.
• A good credit history and demonstrate the ability to repay the loan.
• Required documents including a copy of the applicant’s national ID, proof of income (such as payslips or audited financial statements), and a completed application form.

Application Process

Applying for car financing from NCBA Bank is a straightforward process:

• Visit your nearest NCBA Bank branch or through their official website to fill in an application form.
• Fill out the form with accurate and up-to-date information, ensuring that all required fields are completed.
• Attach the necessary documentation to your application, including proof of income and identification.
• Submit your application to the bank for review and await their decision, which typically takes a few business days.

Advantages and Disadvantages of NCBA Car Financing

Advantages

• Flexible repayment terms make it easier for borrowers to manage their monthly payments.
• Competitive interest rates ensure that borrowers get a fair deal on their loans.
• A wide range of eligible vehicles makes it suitable for various customers with different needs.
• The option for insurance premium financing adds extra convenience for borrowers.

Disadvantages

• Borrowers with poor credit history may face higher interest rates or be denied financing altogether.
• Some borrowers may not qualify for 100% financing, requiring them to come up with a down payment.

5. HF Group

HF Group provides asset finance that enables individuals and businesses to acquire movable assets without having to pay the full cost upfront.

Features and Requirements

To qualify for asset finance from HF Group, applicants must meet specific criteria. The minimum finance amount is Kes 300,000, and the assets funded include:

• Motor Vehicles: New and used private and commercial vehicles.
• Construction Equipment: Machinery and equipment for construction projects.
• School Buses: Vehicles for educational institutions.

The financing terms vary depending on the type of asset:

• New Private Vehicles: HF Group finances up to 80% of the unit cost, with loan durations capped at 5 years.
• New Commercial Vehicles: Up to 70% of the unit cost can be financed, with loans capped at 3 years.
• Used Vehicles (Private and Commercial): Funding is provided for up to 70% of the unit cost, with loan durations capped at 3 years.
• Construction Equipment: Financing is available for up to 70% of the unit cost, with loans capped at 5 years.

Fees and Rates/Costs

HF Group’s asset finance option comes with competitive interest rates and fees. However, these rates and fees may vary depending on the specific asset, loan duration, and other factors. It’s essential to consult with an HF Group representative to get accurate information about the fees and rates applicable to your specific needs.

6. Absa

Absa Car Financing offers flexible financing options and repayment periods for both brand-new and used vehicles. With up to 95% financing for new cars and up to 75% for used cars, you can drive your dream car without breaking the bank. Absa also provides 100% insurance premium financing, ensuring your vehicle is protected from the get-go.

Key Benefits of Absa Car Financing

• Flexible financing options for both brand-new and used vehicles
• Convenient repayment periods of up to 72 months for new cars and up to 48 months for used cars
• One-month repayment holiday for new car financing
• Credit card option of up to KES 300,000 for new car financing
• 100% insurance premium financing for both new and used cars

Requirement

To apply for Absa Car Financing, you must provide specific documents depending on whether you are an Absa account holder.

Absa Accountholders

• Latest payslip (certified)
• National ID card or passport (for non-Kenyan citizens)
• KRA – PIN

Non-Absa Accountholders

• Last two months’ payslips (certified)
• Bank statements for three months (certified)
• One passport photo
• KRA – PIN

Frequently Asked Questions (FAQs)

What is car financing?

Car financing refers to borrowing money to buy a car and paying back the loan in installments over a period of time, typically with interest.

Can I get car financing as an individual, or does it have to be a business?

Depending on the lender’s requirements, you can get car financing as either an individual or a business.

How do I know which car financing option is best for me?

It’s essential to compare the loan amount, repayment period, interest rate, and any additional fees or requirements of each lender to determine which option is best for your needs and budget.

Can I apply for car financing online?

Many lenders offer the option to apply for car financing online or through a mobile app, making the process more convenient and efficient.

What happens if I can’t make my car loan payments?

You may face late fees or additional interest charges, and your credit score may be negatively impacted. The lender may repossess the car to recoup their losses in extreme cases. It’s important to communicate with your lender if you are experiencing financial difficulties to explore potential solutions and avoid defaulting on your loan.

Conclusion

When it comes to buying a car in Kenya, several financing options are available for individuals and businesses. Equity Bank, Cooperative Bank, and Stanbic Bank are among the top lenders offering car financing options with favorable loan amounts, repayment periods, and interest rates.

It’s essential to compare the options, choose the best fit for your needs and budget, and communicate with your lender if you experience any financial difficulties to avoid defaulting on your loan.