Logbook loans gain traction as alternative financing option

Logbook loans are increasingly gaining traction as an alternative source of financing for individuals and small businesses seeking quick access to capital amid tight lending conditions.

Access to affordable and timely credit remains a challenge for many Kenyans, often slowing business expansion and delaying personal projects despite stable income streams and viable ventures.

The gap has been felt most acutely among micro, small and medium-sized enterprises (MSMEs), which rely heavily on short-term financing to manage cash flow.

The financing model, which allows borrowers to use vehicle logbooks as collateral while retaining use of their vehicles, has gained popularity within the non-bank lending sector due to faster approval timelines compared with conventional bank loans. The structure enables borrowers to maintain mobility while addressing immediate liquidity needs.

One of the players in this segment is Mwananchi Credit, which says demand for logbook loans has grown as borrowers look for flexible credit options.

The institution notes that vehicle-backed lending offers a practical solution for customers who need quick access to capital without disrupting business operations or daily transport needs.

According to the lender, eligibility requirements typically include proof of vehicle ownership, a valid driver’s licence and comprehensive motor insurance.

Loan approvals are often processed within hours, with repayment periods ranging from three to 24 months, depending on the borrower’s profile and vehicle value.

The expansion of logbook loans has also lowered entry barriers to credit by reducing reliance on traditional collateral and strict credit history checks.

Some lenders, including Mwananchi Credit, do not require Credit Reference Bureau (CRB) clearance, widening access for borrowers who may be excluded from mainstream banking.

Non-bank lenders offering logbook loans operate within a regulated environment, with institutions required to comply with guidelines set by the Central Bank of Kenya, aimed at strengthening consumer protection and transparency.

Beyond logbook loans, alternative lenders continue to diversify into products such as check-off loans, title deed-backed financing, import financing and local purchase order (LPO) loans, reflecting the growing demand for flexible financing solutions.