Find the best loan repayment terms by entering an amount, interest rate, and loan period. Compare reducing balance and flat rate methods to save money.
Calculate Your LoanEnter your loan details to calculate monthly repayments and total amount
Disclaimer: This calculator is provided as a self-help tool for your independent use. The repayment results in every case are an approximate guide only.
Understanding the difference between these calculation methods can save you thousands
| Comparison | Reducing Balance | Flat Rate | Difference |
|---|---|---|---|
| Monthly Payment | KES 24,161 | KES 25,833 | KES 1,672 more |
| Total Interest Paid | KES 79,864 | KES 120,000 | KES 40,136 more |
| Total Amount Paid | KES 579,864 | KES 620,000 | KES 40,136 more |
In this example, choosing a reducing balance loan would save you KES 40,136 in interest over the life of the loan. That's a significant 33% savings on interest costs.
Most Kenyan banks like Equity, KCB, NCBA, and Family Bank now use the reducing balance method for most loans, but some still use flat rate for specific loan products, especially short-term loans. Always confirm the calculation method before taking any loan.
Bank interest rates in Kenya vary by loan type and institution. Here are the average ranges:
Always compare offers from multiple banks to get the best terms.
With the reducing balance method, interest is calculated only on the outstanding loan balance, which decreases with each payment.
This method results in lower total interest compared to flat rate loans.
Kenyan financial institutions offer various loan products to meet different needs:
Most Kenyan banks require the following for loan applications:
Requirements may vary by bank and loan type. Always check with your specific financial institution.
Get answers to common questions about loans and calculations in Kenya
A reducing balance loan calculator is a tool that calculates loan repayments where interest is charged only on the outstanding principal amount. As you repay your loan, the principal decreases, and so does the interest component of your payment. Most Kenyan banks use this method for mortgages and personal loans.
Current loan interest rates in Kenya (2025) vary by loan type: Personal loans range from 13% to 18%, mortgages from 11.5% to 15%, business loans from 12% to 17%, and asset financing from 14% to 16%. Rates may vary between banks like Equity, KCB, and Family Bank. The Central Bank of Kenya's current base rate also influences these interest rates.
In a flat rate loan, interest is calculated on the initial principal amount for the entire loan period, resulting in higher total interest. In a reducing balance loan, interest is calculated only on the remaining principal, which decreases with each payment, resulting in lower total interest. Most Kenyan banks now use the reducing balance method, which is more favorable to borrowers.
To get the best loan deal in Kenya:
Loan prepayment in Kenya refers to paying off your loan before the agreed term ends. Most Kenyan banks allow prepayment but may charge a prepayment penalty (typically 1-3% of the outstanding balance). When you prepay a loan with reducing balance calculation, you save on future interest payments. Always check your loan agreement for specific prepayment terms and conditions.
