Demand for digital loans looms as Festive season stress kicks in

Loans uptake through digital platforms is expected to significantly swell in the coming weeks ahead of the festive season – a period occasioned by high spending.

Digital lenders are now eyeing December and January to reap huge returns from high spenders.

“In the next weeks we expect to see an increased number in loans uptake and the demand for such quick loans will continue to increase until first quarter of 2020,” says Peter Macharia, a banker and the Chief executive officer of digital lender Jijenge Credit.

Logbook lending which involves specialist companies lending up to 50 per cent, sometimes more of the trade value of the car in return for high levels of interest, according to Mr. Macharia could see an increased growth in loan applications from borrowers who will be looking to pay for travel and holiday costs as well as school fees at the beginning of the year.

“Digital lending is fast and efficient and less paper work required, also the turnaround time is short, and as a result you are likely to see an increase in areas of logbook loans going forward,” he says.

As a result of the anticipated surge in the uptake of ‘soft loans’, he is calling on industry watchdogs to intensify supervision in terms of credit checks on borrowers to prove they can afford a loan in order to bar individuals with poor credit records, bankrupt, or those who have fallen into arrears.

“Credit checks are not thoroughly done before disbursing funds. Background checks on borrowers are also not thorough as with banks, and with more vehicles being imported into the country on a daily basis leading to more vehicle owners taking logbook loans which is made possible by asset finance loans, this should be on high focus now,” he says.

Lack of credit checks has led to an increasing number of borrowers with bad credit records are resorting to taking out loans with exorbitantly high interest against the value of their cars.