Boda bodas and Tuk Tuks are slowly becoming ubiquitous forms of transportation in many towns in Kenya. This popularity factored into KCB Bank’s decision to launch the KCB Boda Boda/ Tuk Tuk Loan.
However, the cost of these vehicles upfront was becoming a barrier for ambitious entrepreneurs. KCB Boda Boda/ Tuk Tuk Loans are specialised financing options designed to provide aspiring entrepreneurs or individuals with the necessary funds to purchase or lease Boda bodas or Tuk Tuks.
This guide explores the key aspects of KCB Boda Boda/ Tuk Tuk Loans. We will discuss everything from eligibility criteria to potential risks and considerations.
By understanding the intricacies of KCB Boda Boda/ Tuk Tuk Loans, aspiring entrepreneurs and individuals can make informed decisions as they embark on their journey towards owning or expanding a Boda Boda or Tuk Tuk business.
Overview of the KCB Boda Boda/ Tuk Tuk Loan
KCB designed the Boda Boda and Tuk Tuk loans as financing options to help individuals or entrepreneurs acquire Boda bodas (motorcycle taxis) or Tuk-tuks (three-wheeled motorised vehicles).
The loan provides the needed funds to purchase or lease Boda Bodas or Tuk Tuks, allowing you to enter or expand your operations in the transportation sector.
Boda Boda and Tuk Tuk loans are popular and efficient modes of transportation in many countries, particularly in urban areas and developing regions. Data shows that the Boda Boda industry in Kenya is worth over Ksh. 300 billion, and it’s still growing.
KCB launched the Boda Boda and Tuk Tuk loans to enable individuals to start transportation businesses or expand their existing fleets. As a result, they generate income and provide affordable transportation services to their communities.
Benefits of KCB KCB Boda Boda/ Tuk Tuk Loans
The transport industry in Kenya is growing, especially in urban areas. Most of the vehicles in the industry were mainly financed by loans. One such financing option that investors explore is the Boda Boda or Tuk Tuk loan because it presents the following benefits:
No. 1: Accessibility
KCB Boda Boda/ Tuk Tuk Loans provide access to financing for ambitious entrepreneurs who may need more capital to purchase these vehicles outright. It allows aspiring entrepreneurs to join the transportation industry and contribute to local economies.
KCB Bank finances up to 70% of the purchase prices of Boda Boda or Tuk Tuk. The loan value is, however, capped at Ksh. 5000000. The loan amount range is extensive enough, considering that the price range for Boda Bodas and Tuk Tuks is between Ksh. 100000 and 350000.
No. 2: Income Generation
Boda Bodas and Tuk Tuks are for public transportation. They have a high demand in many urban areas. Borrowers can generate income through fares or rentals by obtaining a KCB Boda Boda/ Tuk Tuk Loan. As a result, supporting their livelihoods and providing employment opportunities for drivers.
Most employers require that a Boda Boda pays about Ksh. 500 daily if rented and Ksh. 800 for the Tuk Tuk. This is a good pay rate factoring that on a good day, either can make over Ksh. 1500. However, The terms may change depending on location and human traffic; employers ask for more in urban areas.
No. 3: Flexibility
KCB Boda Boda/ Tuk Tuk Loans often come with flexible repayment terms, allowing borrowers to manage their finances according to their income streams. Borrowers can benefit from this flexibility, especially if they experience seasonal variations or fluctuations in their daily earnings.
The bank offers flexible repayment terms of up to 24 months for Tuk Tuks and 12 months for motorbikes. In addition, should emergencies occur, you can approach the bank for loan restructuring, which attracts a 3% negotiation fee.
No. 4: Asset Ownership
The KCB Boda Boda/ Tuk Tuk Loans enable borrowers to own the vehicles once they repay the loan. By owning the vehicles, the borrower can commit to the asset in the long term to continue generating income or sell them for potential profit.
What’s better, should the borrower want to take another loan, they can use the asset as collateral. Banks often ask for collateral when you apply for a personal secured loan or should you want to boost your business with a Boresha Biashara loan.
Economic impact: Boda Bodas and Tuk Tuks are big in local transportation networks. They provide affordability and convenience in transportation. By supporting acquiring these vehicles through loans, KCB Bank contributes to the development of the transportation sector.
Eligibility and Requirements for KCB Boda Boda/ Tuk Tuk
To be eligible for a KCB Boda Boda/ Tuk Tuk Loan, KCB Bank needs that potential borrowers meet certain qualifications. The qualifications include:
- A 3-month active account with any business institution.
- Proforma invoice from Boda Boda and Tuk Tuk dealers.
- A valid driving licence of the rider and driver.
- Ability to repay the loan.
- The borrower must meet 30% of the Tuk Tuk/ boda boda cost; the bank to finance up to 70%.
- A guarantee by the KCB account holder where a log book is a help on simple deposit.
- A 6 months banking history with KCB or three months of group savings.
You can check for more requirements on the KCB Bank website. Optionally, you can contact customer service by filling out the form.
Loan Documentation and Paperwork Needed
Like any other loan, you must provide documentation for the application process. Here are some must-haves for this application:
- Identification documents may include a valid passport, national ID card, or other government-issued identification.
- Proof of address: The bank may require documents such as utility bills or rental agreements to verify your address.
- Driver’s license: Borrowers must provide a valid driver’s license to operate Boda bodas or Tuk Tuks.
- Vehicle information: Applicants may need to provide details about the Boda Boda or Tuk Tuk they intend to purchase, such as its make, model, and registration information.
- Financial statements: Lenders may request bank statements or financial records to assess your financial stability and repayment capacity.
Loan Application Process
The KCB Tuk Tuk/ Boda Boda loan application process involves five key steps:
Step 1: Researching
The research stage involves researching the type of loan that KBC Bank offers and compiling your preferred loan. If you’re reading this, you’ve focused on Tuk Tuk and Boda Boda loans.
Step 2: Preparing Necessary Documents and Information
Review the requirements of the loan and prepare the necessary documentation. This includes proof of address, identification documents, driver’s address, financial statements, and vehicle details. Gather this paperwork and ensure they are up-to-date and ready for submission.
Step 3: Completing the Loan Application
Completing the loan application form is obtained from the KCB Bank branch. Visit the closest bank branch, and an agent will guide you. The form requires your personal details, employment information, income, and financial history.
Step 4: Evaluation and Approval Process
The bank agent handling your application process submits your form for evaluation. The bank conducts its internal assessments by evaluating various factors such as creditworthiness, income stability, repayment ability, and eligibility. After considering all these factors, the bank rejects or approves the loan.
Step 5: Disbursement of Funds
The bank or the agent handling your application sends your approval notification outlining the amount, interest rates, repayment terms, and other relevant details. They will invite you to the bank to sign the loan agreement. Once you sign the loan agreement, the bank will disburse the funds within 24 to 48 hours.
You can utilise the funds by buying your Tuk Tuk or Boda Boda. In such a case, the bank may disburse the funds directly to the vehicle vendor.
Risks and Considerations
There are several risks involved with Tuk Tuk / Boda Boday loans that you need to consider. These risks include:
No. 1: Income Fluctuations
Operating Boda bodas or Tuk Tuks has a lot of revenue fluctuations, influenced by unprecedented factors such as weather conditions, competition, and customer demand. You must consider the potential impact on loan repayment ability during low-income periods.
No. 2: Economic Conditions
Numerous unpredictable changes in the transportation industry can affect the demand for Boda Boda or Tuk Tuk services. This impacts the borrower’s ability to generate sufficient income to repay the loan.
No. 3: Mandatory Insurance
Boda bodas or Tuk Tuk loans from KCB Bank require you to follow regulations, including insurance. Understanding and complying with the insurance obligations to protect against potential liability and damage is important.
Wrap Up
KCB Boda Boda/ Tuk Tuk Loans play a significant role in transportation, particularly in Kenyan urban areas. The loans provide accessibility, flexibility, and income generation and have a great economy, especially in areas where the larger population uses public transportation.
If you’re considering applying for a KCB Boda Boda/ Tuk Tuk Loan, understand the eligibility requirements, documentation needed, repayment terms, and potential risks associated with such loans.
You can apply for a personal car loan if you have valuable assets, such as a Title deed. Like Boda Boda loan, it provides ownership benefits, competitive interest and flexible repayment options.
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