Cost of a vehicle-secured loan with fees and flat interest.
Total repayable
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Processing fee
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Total interest
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Indicative APR
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Fast cash against your car, at a price
A logbook loan lets you borrow against a vehicle you already own. You hand over the logbook, the lender registers a charge on the car, and you keep driving while you repay. It is quick and the approval bar is low, which is exactly why people in a cash crunch reach for it. The catch is the cost, and the cost is easy to underestimate because of how the interest is quoted. This calculator exists to strip away that quote and show you the real number: what you actually repay, and an annual percentage rate you can hold up against any other loan.
The trick is in the phrase "flat monthly rate". A logbook lender that quotes five percent a month is charging that five percent on the full original amount every single month, not on the balance that is shrinking as you repay. So even in your final month, when you have already paid back most of the principal, you are still charged interest as if you owed the whole sum. A normal bank loan charges interest on the reducing balance, which is far cheaper for the same headline rate. That single difference is what makes logbook credit so expensive, and it is the thing this tool makes visible.
A KES 300,000 loan over a year
Run the defaults: KES 300,000 borrowed, a flat 5 percent monthly rate, a 12-month term, and a 5 percent processing fee. The interest is 5 percent of KES 300,000 charged for each of the 12 months, which is KES 15,000 a month, or KES 180,000 over the year. The processing fee is another 5 percent of the loan, KES 15,000, usually deducted from what you receive rather than added at the end. Put it together and you repay KES 495,000 on KES 300,000 borrowed. Annualised, the total finance cost works out to an indicative 65 percent APR, a figure that should stop you in your tracks.
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The bar below breaks the KES 495,000 into its three parts. The principal is the only piece you actually borrowed; the interest block is larger than you might guess, and the fee sits on top. That visual weight is the cost of fast money.
The mistake that makes it worse: paying early
Here is the cruel twist with flat-rate logbook loans. If you come into money and try to clear the loan early, you often save far less than you expect, because the interest was calculated on the full term up front rather than accruing on a balance. Some lenders demand the entire scheduled interest regardless, so settling in month four can still cost you close to twelve months of charges. Always ask, before you sign, exactly how an early settlement is computed. With a true reducing-balance loan, paying early genuinely cuts the interest. With a flat-rate one, it may not.
Who actually needs this
Logbook loans make sense for a short, genuine emergency where you have no cheaper option and a clear plan to repay fast. They are a poor choice for anything routine or for a long term, because the flat structure punishes you the longer you hold the debt. A blunt tip: before signing, price the same need against a sacco loan or a bank personal loan, which charge on a reducing balance and are usually a fraction of the cost. Lenders here are licensed and supervised, and the Central Bank of Kenya and consumer-credit rules require clear disclosure, so insist on seeing the total cost of credit in writing.
Can the lender take my car if I miss a payment?
Yes. The charge on the logbook lets the lender repossess and sell the vehicle to recover the debt if you default, and that is the real risk you take on. Because the loan is secured on something you need daily, missing payments can cost you both the car and your way of getting to work. Borrow only what you can repay even if your income wobbles.
Why is the APR so much higher than the monthly rate suggests?
A 5 percent monthly rate looks like 60 percent a year if you just multiply, but the APR here is higher still, around 65 percent, because the one-off processing fee is folded into the cost of credit. The APR captures interest and fees together and annualises them, which is why it is the honest number for comparing one loan with another. The monthly rate alone hides the fee and the flat-balance effect.