The last few days to payday have been a mystery for many people since the invention of monthly salary systems. We have read thousands, if not millions of essays on how to survive these days. Budgeting advise is probably one of the most read pieces of advise the world over. And budgeting, proper budgeting is a solution to the the tough days to payday.

Payday Loans

Someone came up with an ingenious solution to this problem though. The idea of Micro payday loans. These are short term, 'low interest' loans that mostly salaried people can acquire in cases of emergency. In Kenya, these loans are mostly payable within 30 days and usually demand low security and takes shorter processing periods.

We will have a look at a few payday loan provisions available in Kenya. They include;

i) M-Pepea

ii) Meridian Acceptances

iii) M-Shwari

iv) Loans on Items Providers

Amounts Available

Payday loans usually give low amounts of money, usually between KES 100 and KES 50,000. In the case of the newly launched M-Shwari by Safaricom, loanees will get up to KES 100,000 depending on several factors among them the savings one has in their M-Shwari account.

Meridian Acceptances limited gives loans on Vehicle log books, so the amount they give depends on the value of the vehicle or what the borrower asks for although they have a cap at KES 300,000.

M-Pepea gives instant loans via mobile phones ranging from KES 1,000 and a maximum amount of KES 20,000.

Most 'Instant Cash on Items' shops in town give a minimum of KES 500 and the maximum value depends on the value of the item the loan is given against. They loans on plots, cars, electronics and phones.

Interest rates

Payday loans are short term in nature  and usually attract lower interest rates with a one of payment. However, the compounded interest that comes there after and sometimes penalties may make these kinds of loans unfavorable.

The newly launched M-Shwari by Safaricom will allow payday loanees to borrow money at a one-off interest rate (they call facilitation charge) of 7.5%.

M-Pepea charges interest on its loans depending on the amount and repayment period with lows of 5.7% and highs of 20.5%. The longer it takes to repay a loan and/or the lower the borrowed amount, the higher the interest rate.

Instant Loan on Items providers give loans at a constant rate of 30% per week compounded interest.

Meridian Acceptances Limited gives the instant loans at lower end rate of 5% and the high end is not established.

Repayment Period

• M-Shwari - 30 days
• M-Pepea - 30 days maximum
• Loans on Items- 7 days
• Meridian Acceptances - 30 days

NOTE: Before signing up for any payday loan, please be sure to read and understand the terms and conditions for the same. Sometimes, some details not understood by the borrowers could make one end paying more they should or could have.