Financing made easier!

Owning a car today has been made just absolutely easy with dozens of financial aid firms at your doorstep. At your preference consider microfinances, SACCO groups, banks which offer quick loans with a reasonable interest rate and offer a long term payment period for any sort of vehicle be it private, commercial or construction equipment.

What you need to know before getting a car loan

The Five Cs of Credit

The five Cs of credit is a type of checklist that lenders use to gauge a borrower’s creditworthiness. It weighs five characteristics of the borrower and conditions of the loan, in attempt to estimate the chance of default. Default refers to the borrower’s failure to pay interest or principal on a loan when it’s due.

Character

Character is also referred to as credit history, which gives the lender an idea of the borrower’s history in regards to repaying debt.

Capacity

Capacity assesses the borrower's debt-to-income (DTI) ratio. This means how much debt you have versus how much income you have coming in. In addition, job history is also examined to see how long the borrower has been at their current place of employment.

Capital

Capital refers to the down payment you put toward your purchase. Down payments can show the borrower's level of seriousness and dependability, which can help make lenders more comfortable.

Collateral

If a borrower was to stop making their payments, collateral may be needed in order to give the lender assurance that they can repossess the purchase. In the case of an auto loan, the car would be the collateral.

Conditions

The conditions of the loan, such as the amount of principal and its interest rate, can help influence the lender's chances to finance the borrower. Specific conditions refer to how a borrower intends to use the money, such as using a vehicle solely for school or work.

What are the documents required for a car loan? The documents required for a car will be different depending on your source of income. The list below offers an overview of the required documents. But do check with your bank for specific requirements. Proof of identity documents:

National ID card,

Passport documents

KRA Pin number Proof of address documents:

National ID card, passport, telephone or electricity bill, Shop & Establishment Act certificate (for self-employed individuals), among others. Proof of income documents:

• Bank statement of the last six months

• Salary slip and form 16 (for salaried persons)

• Income tax returns (for self-employed persons)

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