Travel Loans in Kenya
Loans are a hot topic in Kenya at the moment. This comes after Kenya’s loan bid to the Chinese government to extend the SGR from Naivasha to Kisumu was rejected. Following this seeming slap in the face, a lot has come out about the debt situation of the country. At a more individual level, Kenyans have become avid borrowers from a host of money-lending apps available in the country. In fact, Tala, Branch, and M-KOPA were some of the highest funded startups of 2018. What an appetite we have for loans. In that light, let me offer a side dish of Kenya’s newest borrowing trend: travel loans in Kenya.
What Are Travel Loans?
Travel loans are simply loans taken to finance one’s holiday or travel plans. Usually, they work a little something like this. One comes up with a budget for a vacation. Usually by looking around for resorts and what not. Once the budget is set the next step is to raise the money for the trip. Getting a lump sum of money is often hard with all the financial responsibilities one has. Saving up for months or even years may even drain the wanderlust that inspired the trip in the first place. The next best thing is taking travel loans in Kenya.
Where to Get a Travel Loan in Kenya
Kenyans are not at a loss for money-lending platforms. From mobile apps to financial institutions such as banks and SACCOS. However, few if any of these platforms are optimized for travel loans. Mobile money-lending apps may have an extremely short repayment schedule, usually a month. That and markedly high-interest rates. Banks may require collateral that one simply does not have. SACCOS may ask for guarantors who are a whole other muddle in on themselves.
In comes, Vacay with their “trip now pay later” loan service. While we have not used the service ourselves it is an interesting concept. Clearly, the biggest obstacle to a dream vacation for most Kenyans is money. However, what if you could go on the vacation and pay later in pocket-friendly monthly installments. Sounds like an appealing idea. One may not have 100K for a family vacation but spread out over a period of six months it suddenly sounds viable.
A Few Caveats
All said and done there are a few caveats both on the borrower’s side as well as the lender’s. For the lender, be wary of the fact that statistics show that about 50% of Kenyan digital borrowers have admitted to having been late to pay a loan. 12% have defaulted on a loan. For borrowers, once the vacation is over it’s time to get up and smell the coffee. Reality sets in and for the next six months or so one is left making monthly payments on a product that only exists in memory which can be frustrating, to say the least. Also, there can be dire consequences for late payments or defaulting on travel loans in Kenya altogether.
Let us know what you think. Would you take a travel loan? Should we offer travel loans? Share your thoughts in the comment section below or message us on Facebook. You can also simply find out How to Travel on a Budget.
