How car financing and hire purchase work in Kenya
Last updated · Cada car guides
Most Kenyans finance a car through bank asset finance (hire purchase), a SACCO car loan, or a dealer or non-bank lender. Banks typically lend up to about 80% of a used car's value over up to four or five years and limit used cars to about 7–8 years old; SACCOs lend against your savings and guarantors; non-bank and logbook lenders approve faster but cost more. Every lender needs your ID, KRA PIN, proof of income, a pro-forma invoice or sale agreement, a valuation and comprehensive insurance noting the lender's interest, and the lender is recorded on the logbook until you finish paying.
| Bank used-car LTV | About 70–85% (e.g. I&M 80%/48 months, Access 80%/48 months) |
|---|---|
| Bank used-car age cap | About 7–8 years (e.g. Absa 7, DTB 8, I&M 8) |
| Fees | Usually 1–3.3% of the loan, plus 20% excise duty on bank fees |
| Core documents | ID, KRA PIN, income proof, invoice/sale agreement, valuation, insurance |
| Security | Lender recorded on NTSA logbook; may also register at BRS Collateral Registry |
| Hire-Purchase Act s.15 | After two-thirds of the HP price is paid, the owner can repossess only through court |
Choosing a lender
- Bank asset finance: cheapest money, most paperwork, strict age limits.
- SACCO: depends on your deposits and guarantors; good if you already save there.
- Non-bank and logbook lenders: fast, but read the late-payment and repossession terms carefully.
- Dealer payment plans: agreed with the seller; read the agreement and the payment schedule.
Your protection under the Hire-Purchase Act
Under section 15 of the Hire-Purchase Act (Cap. 507), once two-thirds of the hire-purchase price has been paid, the owner may recover the car only by going to court. If the owner repossesses in breach of that, the agreement ends and the hirer can recover what they paid. Kenyan courts have applied this rule to vehicles. The Business Registration Service notes the Act does not cover corporate hirers or agreements above KES 4 million, and many bank and logbook loans are structured as secured loans rather than hire purchase, so read which law your agreement relies on.
Before you sign
- Ask for the total cost of credit, not just the monthly payment.
- Check what happens if you miss a payment and how long you have to catch up.
- Confirm the car's age at the end of the loan fits the lender's limit.
- Keep comprehensive insurance active for the whole loan; it is a condition of every lender.
Common questions
Can I get car finance with only M-Pesa statements?
Some non-bank lenders and SACCOs accept M-Pesa and bank statements as income evidence. Banks usually want payslips or audited accounts as well.
When does the logbook move to my name alone?
When the loan is fully paid and the lender discharges its interest on the NTSA record.
On Cada
Sources
General information, not legal, tax or financial advice. Rules and fees change; confirm with the authority named in the sources before you pay.