The business of mobile lending has attracted quite a number of players in Kenya, some that have a very good reputation with their users and excellent services. Branch and Tala fall in this better bracket.
When you hit the install button for a mobile loan app, all you need is to quickly sign up and receive a confirmation message asap.
Nobody expects to be stuck on the registration page answering a string of unnecessary questions.
Any believer in technology and how it can make our lives better will tell you that mobile lending apps are a god-send.
Instead of having to call friends and risk relationships because of small amounts, you can just install an app, sign up and get sorted in a matter of minutes.
If you checked into Google Play Store and searched for Loans, you will be greeted by quite a number of mobile loan apps.
If Google Play Store data is anything to go by, some of these mobile lending apps are quite popular in Kenya.
Let’s have a look at the two most popular ones. For a comprehensive list of all the working mobile loan apps in Kenya, check this article.
Branch vs Tala
Branch is one of the most popular mobile lending services that hit the Kenyan market in 2015, currently serving more than 2 million customers in sub-Saharan Africa.
The Branch Loan app has received more than 10 million downloads to date, with 213,790 reviews and an average review rating of 4.5.
Tala (formerly Mkopo Rahisi) is yet another mobile lending giant in Kenya and beyond, launched in the year 2014.
The Tala Loan app has received more than 5 million downloads to date, with 366,239 customer reviews and an average review rating of 4.6.
Of course borrowers may not be interested in the finer details of which mobile lender has the best terms, given the pressure that normally comes with looking for mobile loans.
It remains important though, to understand these details before committing yourself to a mobile loan of whichever amount.
1. Branch has a better Referral Program
Initially, their referral program allowed a customer to earn Ksh. 500 when an invited friend repays their first loan.
With the new Branch referral program, both the referrer and the referred will each enjoy a bonus!
Once your referred friend repays their first loan, you will earn Ksh. 500 and the referred friend will earn Ksh. 200, an amount that is redeemable on the next loan.
It’s this Sh. 200 that makes it attractive for new Branch customers to use referral codes/links when signing up for the first time.
Tala offers a KSh 500 referral bonus to you when the person you referred uses your referral code, qualifies, and pays off the loan. This bonus can be used to help pay your current or future loan with Tala.
The person referred, however, gets no benefit in using the Tala referral code, something that makes it unattractive for new customers to use referral codes.
2. Branch has higher Loan limits
Anyone looking for a mobile loan has some pressing financial needs they need to be met fully and urgently. The higher the loan limit, the better.
Branch offers loans up to Ksh. 50,000. Tala allows you to borrow up to Ksh. 30,000 depending on your M-Pesa transactions and timely repayments.
3. Tala has Lower Interest Rates
Taking out a loan can feel complicated. Yes, there are complex words, sometimes hidden charges and complex mathematics involved, something missed out by many people.
Every loan service has different fees, terms and conditions.
When committing yourself to a mobile loan, you need to know how much you’re paying to borrow the money.
Keep an eye out for hidden fees — you don’t want to be surprised! When considering using a loan, be intentional so you can plan for your future.
It should not be a spontaneous decision, but rather a thoughtful process so you can plan when you can pay back your loan, with what allocated fees.
When a loan comes with growing daily fees, it’s more difficult to make long-term financial decisions because you have to pay immediately. This is because the longer you wait, the more you will pay.
Let’s begin with Tala, a mobile lender that charges a service fee, a fixed fee based on the original amount of the loan. With Tala, you know exactly how much you owe from the very beginning. This service fee is charged at between 5 -15% of the borrowed amount.
Let’s take an example with a borrowed amount of KSh. 5,000. Tala will charge a one-time service fee of 5% for 30 days. The service fee would be 250 shillings. You would pay Ksh. 5,250 in total.
A maximum loan of Ksh. 30,000 will attract a 15% interest, which is Ksh. 4,500. The total amount to be repaid therefore would be Ksh.38,500.
Add this to the rollover fee of 8% for loans rolled over for defaulting the one month Tala repayment period.
Let’s take a similar amount of Ksh. 5,000 Branch loan for 30 days. Branch will charge 13% interest, which will be Ksh. 650. You would pay Ksh. 5,650 in total.
Larger loan amounts will attract higher interest rates. A maximum loan of Ksh. 70,000 will attract a 29% interest, which is Ksh. 20,300. The total amount to be repaid therefore would be Ksh.90,300.
Add this to the monthly interests of between 2% to 16% for loans exceeding one month repayment period.
Outside the Branch and Tala bracket, some mobile loans come with an additional recurrent cost sometimes called an access or maintenance fee, normally charged daily, monthly or annually.
This fee can add up very quickly and make the mobile loan extremely expensive.
4. Branch has Longer Repayment Periods
Unlike Tala which has a rigid one-month repayment period, Branch is probably the only digital lender in Kenya that offers loans repayable in more than 1 month.
Branch has repayment plans ranging from one month to 12 months, depending on the borrowed amount.
Loan repayments spread out over such long durations give loanees ample time repaying as they meet other daily financial needs.
This also makes Branch loans very suitable for non-salaried borrowers who rely on unpredictable incomes to pay their bills.
5. Branch has more flexible Repayment Terms
In order to soften the pinch of paying the loans at once, Branch allows its customers an option to choose between weekly and monthly repayment options.
This gives borrowers the freedom to take control of their repayment schedules, depending on their income cycles.
On the other hand, Tala Loan repayment terms are rigid. Your loan repayment is spread out to four weeks. Failure to meet the weekly repayments lowers or stagnates your credit limit.
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