Borrowing from NCBA Bank involves various fees that can affect the overall cost of loans and overdrafts. Understanding these fees is crucial for managing debt effectively. This article provides an overview of the key charges associated with personal and business loans, as well as overdraft facilities at NCBA Bank.
Personal Loans:
- Loan Processing Fees:
NCBA Bank charges a processing fee of 2% of the loan amount for personal loans, with a minimum charge of KES 1,000. This fee is deducted from the loan amount before disbursement, so borrowers should factor it into their loan calculations. - Early Repayment Penalties:
Customers who repay their loans ahead of schedule may incur an early repayment penalty of 5% of the outstanding balance. This fee is designed to compensate the bank for the interest income lost due to early repayment.
Business Loans:
- Charges for SME and Corporate Loans:
Business loans at NCBA Bank, including those for SMEs, typically carry a processing fee of 1.5% of the loan amount. Corporate clients may negotiate lower fees based on the size and complexity of the loan. Additionally, fees for special loan products like asset financing can vary depending on the terms and conditions. - Fees for Special Loan Products (e.g., Asset Financing):
Asset financing loans, designed to help businesses acquire equipment or vehicles, come with a processing fee of 2% of the loan amount. There may also be additional charges for valuation and legal services related to the collateral.
Overdrafts:
- Interest Rates and Fees for Overdraft Facilities:
NCBA Bank offers overdraft facilities with an interest rate ranging from 14% to 18% per annum, depending on the client’s risk profile. In addition to interest, there is a facility fee of 1% of the overdraft limit, charged annually. - How to Manage Overdraft Costs:
Customers can manage overdraft costs by negotiating favorable terms and regularly monitoring their account balances to avoid unnecessary overdraft usage. It’s also advisable to use overdrafts as a short-term financing solution to minimize interest expenses.
Key Takeaways:
Borrowers should carefully consider the fees associated with NCBA loans and overdrafts, including processing fees and potential penalties. By understanding these charges, customers can make informed decisions and reduce the overall cost of borrowing.
