Loan calculator Kenya: reducing balance or flat rate
At the average bank rate of 14.5%, Ksh 100,000 over 12 months costs Ksh 9,002 a month on a reducing balance, Ksh 8,027 in interest. Quoted flat at the same rate it is Ksh 9,542 a month and Ksh 14,500 in interest, which is really 25.8% a year.
Rules as of October 2026. Updated .
Work out your repayment
Monthly repaymentKsh 9,002for 12 months
| Amount borrowed | Ksh 100,000 |
|---|---|
| Total interest | Ksh 8,027 |
| Total you pay back | Ksh 108,027 |
Quoted flat, the same 14.5% would be Ksh 9,542 a month, with Ksh 6,473 more interest.
Before fees. Banks add a processing fee and insurance; ask for the total cost of credit before you sign.
A loan at Ksh 9,002 a month has to fit next to rent and fare. In GrindLife Nairobi you start broke on a real payslip. See if it fits.
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Reducing balance, the bank average, in Ksh a month.
| Borrowed (Ksh) | 6 months | 12 months | 24 months | 36 months | 60 months |
|---|---|---|---|---|---|
| 50,000 | 8,689 | 4,501 | 2,412 | 1,721 | 1,176 |
| 100,000 | 17,379 | 9,002 | 4,825 | 3,442 | 2,353 |
| 200,000 | 34,757 | 18,005 | 9,650 | 6,884 | 4,706 |
| 500,000 | 86,893 | 45,011 | 24,125 | 17,210 | 11,764 |
| 1,000,000 | 173,786 | 90,023 | 48,249 | 34,421 | 23,528 |
| 2,000,000 | 347,572 | 180,045 | 96,499 | 68,842 | 47,057 |
Flat rate or reducing balance?
On a reducing balance you pay interest only on what you still owe, so the interest shrinks every month. On a flat rate you pay interest on the whole amount for the whole loan, even in the last month when you owe almost nothing.
So the same number means two different prices. Ksh 100,000 over 12 months at 14.5% flat costs Ksh 14,500 in interest; on a reducing balance it costs Ksh 8,027.
| Rate quoted | Flat, a month | Reducing, a month | The flat rate is really |
|---|---|---|---|
| 10% | 9,167 | 8,792 | 18% |
| 12% | 9,333 | 8,885 | 21.5% |
| 14.5% | 9,542 | 9,002 | 25.8% |
| 18% | 9,833 | 9,168 | 31.7% |
| 24% | 10,333 | 9,456 | 41.7% |
Banks, saccos and phone loans
- Banks price loans off the Central Bank Rate, 8.75% since February 2026, plus their own premium. The average bank loan cost 14.5% in 2026.
- Saccos lend up to 3 times your deposits. In 2024 they paid an average of 7.14% on deposits and 10.9% on shares. Ask whether the loan rate is flat or reducing.
- A 30-day phone loan charges a 7.5% fee plus 20% excise on the fee. On Ksh 1,000 that is Ksh 90. At that pace for a year it would be 110%.
Questions people ask
How do I calculate a loan on a reducing balance?
Each month the interest is the yearly rate divided by 12, times what you still owe. The repayment stays the same, so more of it goes to the loan as the interest falls. Ksh 100,000 over 12 months at 14.5% comes to Ksh 9,002 a month.
Which is cheaper, flat rate or reducing balance?
Reducing balance, at the same quoted rate. 14.5% flat over a year really costs about 25.8% on a reducing balance.
What is the average bank loan interest rate in Kenya?
About 14.5% a year in 2026. Banks add their premium to the Central Bank Rate, which is 8.75%.
How much can I borrow from a sacco?
Usually up to 3 times what you have saved with it, with guarantors for the rest.
Are phone loans expensive?
Per year, yes. Ksh 1,000 for 30 days costs Ksh 90 with excise. That pace over a year is 110%.