Skip to main content

5 main charges, levies added to your loan interest that banks don’t tell you

Image
By

When you go to the bank to ask for a loan, you are usually told what interest the loan will attract over a year.


For example, the current interest rate for bank loans in Kenya is capped at 13.5 per cent – and this is the figure your bank will tell you when you inquire about getting a loan from them.

But what many of you might not know, and the bank won’t tell you, is that, on top of the 13.5 per cent interest rate, there are multiple fees, levies and charges that account for up to 6.4 per cent addition to the bank interest rate.

We take a look at five of the charges;

Government taxes

The charges that your bank imposes on your loan are subject to exercise tax – usually at the rate of 20 per cent.

For bank fees that range from Ksh20,000 to Kshh40,000, the excise charge is usually between Ks4,000 and Ksh8,000 per loan application.

Loan application/processing fees

Depending on the bank, these fees include an appraisal, negotiation fees and loan arrangements.

Banks normally deduct this fee from the loan amount, although some will ask that the borrower pays it upfront. These fees vary from lender to lender, and are normally pegged as a percentage of the loan amount—and can therefore add significantly to the total cost of borrowing.

Lawyers’ fees

When you apply for a bank loan, there is usually collateral involved and the bank will have to seek the services of a lawyer to run due diligence on the collateral property.

This process is meant to ascertain ownership, and compliance with regulatory levies such as land rates and ensure that it is not charged on other loans.
Find Property in Uasin Gishu County
Baoriat Agencies

Call: +254 721-554-937

The lawyers will also handle the process of charging the property on the loan, and the release when payment is completed.

Some lenders will engage external legal help for drafting loan contracts, which adds to the cost for the borrower. The borrower also covers the government fees for registering the security.

Credit Life Insurance

A third-party mandatory fee that is meant to cover the lender in case a borrower is unable to service the facility as a result of death, job loss, disability or terminal illnesses that impair the ability to service a loan.

Also known as loan protection cover, it is taken out by the borrower on behalf of the lender, where they pay a premium against which the lender will be compensated in case of the borrower’s death, for instance.

The average annual insurance fee for an Sh1 million unsecured loan in a tier one lender is between 0.4 per cent and 0.6 per cent of the loan amount.

Valuation fees and stamp duty

Borrowers using land, vehicles or property as collateral for loans also incur costs related to the valuation of these securities when taking up the loan. These valuation fees are also applicable for mortgage borrowers.


Banks need the valuations done so as not to be left short in the cover for the secured loan facilities.

Home loans also attract stamp duty, levied by the Kenya Revenue Authority (KRA) at 4.0 per cent of the cost of property or value on the open market, and an additional 0.1 per cent of the loan amount upon making a charge on the property for collateral purposes.

Baoriat Agencies is committed to helping you find the best place for you to settle in Eldoret town. We walk you through the entire process of acquiring your own property in Eldoret until it has been transferred into your hands.

To learn more about buying a property in Eldoret, 

Call 0721-554937

WhatsApp  https://wa.me/0721-554937  

Email evekibet@gmail.com or 

Visit us at  Juma Hajee Building room number 16, Eldoret town 

Follow our Facebook Page Boariat Agencies for the latest deals.

Comments

Post a Comment

Popular posts from this blog

Major Streets in Eldoret Town – Perfect for Mega Investments

By
  If you are looking for a place to put your investment in around Eldoret town, then consider the Central Business District (CBD). With the growing population that is pushing the expansion of Eldoret town – which is currently an economic, education, sports, health and a transport hub for at least 23 counties in the North Rift region and Western Kenya, this Uasin Gishu’s capital is the best bet for your investment. The Eldoret CBD is comprised of FOUR major streets where you can be sure your investment of whatever kind will give you maximum returns. Here are the four major streets in Eldoret CBD: Ronald Ngala Street When you are coming into Eldoret town from Nairobi through Nakuru Highway, this is the first street you will come across as you enter the CBD. Just at the start of Ronald Ngala Street is the iconic Barng’etuny plaza – one of the oldest buildings in the town. Opposite it is several banks including Bank of Africa, Sidian Bank and Cooperative Bank. Other key facilit
Post a Comment
Read more

WHAT ARE TITLE DEEDS

By
  First of all we want to know what exactly is a title deed? A Title Deed according to the dictionary is  a legal deed or document constituting evidence of a right, especially to ownership of property. That means that for one to have claim on a piece of the land, he / she must have a title deed written in his/ her name.  When looking to invest in a piece of land, the first thing you will need to do as a buyer is to conduct an official title deed search at the local land registry. This is often done in the county office in which the land is located. In Kenya there existed different types of title deeds as per the different types of land Acts that have been in existence from colonial times up to the post-independence era. Find Property in Uasin Gishu County Baoriat Agencies Call: +254 721-554-937 Here are the different types of title deed: Indenture :  a title under the Government Lands Act Cap 280 (repealed) Grant :  Government grant under Registration of Titles Act Cap 281 (repealed) a
Post a Comment
Read more

HOW TO MAKE MORE PROFIT AS A POULTRY FARMER IN KENYA

By
Poultry farming is one of the lucrative farming businesses we have in Kenya. Every poultry farmer would wish to make more profit in terms of good cash. We as the Baoriat Agencies  will guide you through your successful journey of poultry farming. Breed choice and the market type are two major underlying factors that will help any poultry farmer make more profit than before. Breed type. In Kenya, we have various breeding types of chicken namely; Rainbow rooster, Kenbro, Kuroiler and KARI improved kienyeji. When it comes to breed type, always opt for the birds with high egg production and has low feed consumption.  KARI improved Kienyeji Chicken are the best breed because they exhibit desirable characteristics such as resistance to diseases, mature very fast as compared to other breed type, have the sweetest meat and also they produce eggs of high quality. They also require an average of 50 grams of feed per day hence, saves the farmer a lot of money used to buy the chicks feeds. Market.
9 comments
Read more