Review: The Platinum Credit Logbook loan, Flexible & Fast

The logbook loan is seen by many Kenyans as the ultimate pick-me-up during financial emergencies.

That is in situations where you are in urgent need of cash either to handle a conventional emergency such as hospitalisation or when you urgently need cash to pay for something time-bound such as school fees or to take advantage of a money-making opportunity such as supplying a large tender. 

One of the biggest reasons why logbook loans are popular in Kenya is because of the incredibly fast speeds in which funds can be accessed. Many logbook loan providers in Kenya, given the right circumstances, say they can disburse a loan in less than 24 hours from the time of first interacting with a client.

Not only are you able to get your funds processed fast, but with logbook loans, you also are also able to get relatively high amounts. In Kenya today, you can for instance get from anywhere between Ksh70,000 to up to Ksh2.5 million in logbook loans processed in under one day. 

This is generally one of the fastest ways to get such high amounts of cash without having to deal with lengthy paperwork and lots of back-and-forth. It is ideal for emergency situations where speed is of utmost importance. 

But with speed also comes the challenge of getting the eligibility requirements right.

Also Read: All You Need to Know About Logbook Loans in Kenya

Anyone who has ever taken a logbook loan in Kenya will tell you how relieving it can get when you find a lender who is flexible enough to consider your unique circumstances and tailor the loan terms to accommodate some of the imperfections an emergency may find you with.

Apart from eligibility challenges, with logbook loans, cost is not as simple as 1 + 1. Beyond the interest rate, there are other costs that are associated with the logbook loan application process that could easily dampen the situation, especially during an emergency.

Given the fact that a logbook loan is a secured loan, most of these costs are third party fees that facilitate the collaterisation of the vehicle to enable you to qualify for the loan. 

Typically, you may have to pay for third party fees upfront - some even before you know you have qualified for the loan (meaning you could lose the money if your car is disqualified) and generally before your loan is disbursed. 

If you cannot raise these amounts upfront, you may find yourself unable to take advantage of that money-making opportunity, late in paying fees or unable to pay for that medical emergency in time. 

Some lenders, cognisant of this potential challenge have been offering eligible customers the option of capitalising the upfront fees so they do not have to spend anything off-pocket when trying to quickly handle an urgent financial need and they are cash-strapped. Some too offer the option to deduct the upfront fees from the amount to be disbursed. 

These are some of the most important factors that Kenyans consider when choosing a logbook loan provider given that each provider has their own terms and conditions that may make them less or more attractive depending on the borrower's circumstances.

To help you further visualise the options you have when considering a logbook loan provider, we take the example of the Platinum Credit Logbook Loan where we take you through its features and how it compares to other alternatives in the industry on the above and more factors that matter to you. 

Platinum Logbook Loan Overview

Platinum Credit Limited is a credit only microfinance institution (MFI) licensed in Kenya under the Company’s Act. Founded in 2003, the institution offers, among other loan products, the Platinum Credit Logbook Loan that gives loan amounts of up to Ksh2 million at a monthly interest rate of 4%. 

It provides financing of up to 60% of the forced sale value of the car. Loan amounts range from a minimum of Ksh70,000 to a maximum of Ksh2.5 million.

Also Read: Logbook Loans: Understanding Market Value Vs Forced Sale Value

With loan tenures of between 3 months and 24 months, the Platinum Credit Logbook Loan is popular for financing vehicles as old as those whose year of manufacture is 2000 as well as being accommodative of borrowers who may not have the cleanest of credit histories. 

Platinum Credit has 52 branches nationwide.

Let’s dive in. 

1. Platinum Logbook Loan Eligibility Requirements

The Platinum Credit Logbook Loan is designed for individuals who own vehicles, whereby the loan is secured by the value of your car.

If you are looking to take advantage of a quick business opportunity, expand your business, fund a personal growth project or to sort out a financial emergency, the Platinum Credit Logbook Loan is one of the options you can consider. 

Additionally, you can use this loan to fund anything of your liking i.e. there are no restrictions on loan usage. 

To qualify for a Platinum Credit Logbook Loan, you will be required to have the following that determine your eligibility; 

• Original logbook of a vehicle in your name
• The vehicle date of manufacture cannot be older than 2000
• All vehicle makes are accepted
• Vehicle must have comprehensive insurance cover. If you do not have this cover, Platinum Credit can finance via their Insurance Premium Financing (IPF) service
• You may also qualify for a Platinum Credit Logbook Loan even if you have a negative record on the CRB (This is dependent on other factors that Platinum determines internally) 

Other documents required in addition to the above are;

• 6 months M-pesa Statements/6 Months Certified Bank Statements
• Copy of KRA PIN
• Copy of your original National ID
• One coloured passport photo (preferably taken in the office)

2. Platinum Logbook Loan Cost

Interest Rate

The Platinum Credit Logbook Loan is offered at a monthly interest rate of 4%.

Interest Structure

The loan is offered at a flat rate interest structure. This means that interest payments are calculated based on the initial principal amount.

Mandatory Upfront Fees

The only fee that is mandatorily charged upfront when applying for the Platinum Credit Logbook Loan is Ksh600 which is the amount the institution charges for the logbook search at NTSA. This is one of the lowest mandatory upfront fees in the market. 

Processing, Tracker and Insurance Fees

These are standard fees associated with logbook loans. For the Platinum Credit Logbook Loan, the processing fee is set at 4% of the loan amount.

For the car tracker, you will be charged a monthly fee of Ksh1,700 and a credit life insurance fee of between 0.37% - 0.5% of the loan amount. 

Credit life insurance is an insurance policy type that pays off any outstanding debt in the unfortunate event that the borrower dies while still servicing the loan. 

Upfront Third Party Fees

Due to the process of collaterisation, logbook loans come with some upfront third party fees such as Valuation (Ksh2,700 - Ksh4,200), NTSA In-charge (Ksh1,175), Logbook Discharge (Ksh1,175), Car Tracker installation (Ksh5,000), Chattel Registration (Ksh1,050) and Post Logbook Search fee (Ksh750). Note that the fees quoted here apply to the Platinum Credit Logbook Loan. 

If you are applying for a Platinum Credit Logbook Loan and do not have the money to pay for the third party fees upfront, the institution gives its customers two options to ensure this does not prevent them from accessing the amounts they need.

Option one is having the fees deducted from the disbursed loan amount, so you receive the amount you applied for less the third party fees. 

If you choose this option, it is important to know what take-home amount you need and apply for the right amount such that the deduction doesn’t leave you short of cash. It can be beneficial in terms of reducing total loan costs as compared to adding the fees to the principal amount.

The second option is called capitalisation. This is where the third party fees are added to the principal amount. Here you get the exact amount you applied for but your principal increases slightly by the total amount of loan fees. 

In this option, you pay interest on the fees which you don’t have to with option one above - but get the exact take-home amount you applied for. As such, the total loan cost increases due to the additional interest (on capitalised fees). 

Note that you must sign a consent form for any of the two options above to apply. 

Otherwise, if you can raise the cash, you can simply pay the third party fees from your pocket. 

The repayment frequency for the Platinum Credit Logbook Loan is monthly

Late Fees 

You will be charged a late fee of 0.33% of the instalment balance if you fall late in your monthly repayments. 

3. Where the Platinum Logbook Loan Stands Out

Capitalisation and Deduction of Fees

The ability to either have the third party fees deducted from the disbursed loan amount or added to the principal is a useful one especially when you are cash-strapped and cannot raise these funds fast enough. 

Platinum Credit is one of the few lenders that allows its users these two options as well as the option to pay for these fees in cash. Some lenders do not offer you the option to pay in cash and restrict you to capitalisation. Many lenders too do not offer the option of deducting the third party fees from the amount to be disbursed.

Capitalisation can be advantageous for anyone who does not have the amount needed to pay for the third party fees and needs to receive the exact amount they applied to sort out an emergency or take advantage of a business opportunity. Literally, you drive to a branch with nothing but the fuel in your car and Ksh600 and walk out in a few hours with the full loan amount you require. 

Deduction can be advantageous for someone who doesn’t have the money needed to pay for third party fees but does not mind receiving a loan amount that is slightly lower than the amount applied for. They benefit from not having to pay a slightly higher interest amount as would have been the case with capitalisation had the third party fees been added to the loan amount.

Paying for the third party fees in cash from your pocket assures you get the exact amount you want and you do not have to pay marginally more interest amount since the fees do not earn any interest.

Platinum Credit Accepts Older Vehicles

While most logbook loan lenders do not accept cars whose year of manufacture is older than 2005, for a Platinum Credit Logbook Loan you can qualify even if your car was manufactured in the year 2000.

This allows borrowers with vehicles manufactured at the turn of the millennium and onwards the ability to get financing as long as their cars pass valuation. 

All Vehicle Makes Accepted

Closely associated with car age is make. Make refers to the brand of the vehicle e.g. Toyota, Mazda, Nissan etc. while model refers to the specific model of the vehicle e.g. Toyota Vitz, Mazda Axela, Nissan Teana etc. 

While some lenders may reject certain car makes, with the Platinum Logbook Loan you can bring any car make for consideration for a logbook loan.

This, coupled with the fact that older cars up to those manufactured in 2000 are accepted, increases one’s chances of qualifying for a logbook loan with Platinum Credit as compared to lenders that have stricter vehicle restrictions. 

Early Repayment Allowed, No Penalties

Another standout feature of the Platinum Credit Logbook Loan is the fact that you can repay your loan earlier than the tenure you signed up for with zero penalties. 

This means that if your financial circumstances change during the loan tenure, you can reduce your principal faster or even pay off the loan one-off and save on interest that you could have paid had you carried the loan to full term. 

Some logbook loan lenders will either charge you an early repayment penalty or still charge you the full interest you would have paid whether you pay early or not.

Low Mandatory Upfront Fees

As mentioned earlier, the Platinum Credit logbook loan has one of the lowest upfront fees among non-deposit-taking logbook loan providers. These are the mandatory fees one has to pay a lender to access a credit facility. 

With Platinum Credit Logbook Loan, you only need to raise Ksh600 upfront. Some lenders charge as high as Ksh6,000 in mandatory upfront fees with the average amount charged being around Ksh3,000.

Note that mandatory upfront fees are not refundable if the lender ends up turning down your loan application. In this respect, lower upfront fees can be advantageous.

More importantly, lower upfront fees also eliminate the barrier to accessing quick finance when in urgent need and you are not liquid. 

Above Average % of Car Value Financed

Logbook loans are loans secured against the value of your car. This is determined by an independent valuer who has been vetted by the lender. 

The value a lender uses is not necessarily the sale price (what the seller is asking for) or market value (the price the car can go for in the marketplace given sufficient time and marketing). 

A lender will use the forced sale value - the amount the car can reasonably sell for if it was put on sale for a period that was too short to allow for proper marketing. It is a percentage of this value that is given as loan.

With the Platinum Credit Logbook Loan, you can get up to 60% of your car’s forced sale value. This is above the average amount financed among non-deposit-taking microfinance institutions offering logbook loans which currently stands at 50%.

Getting a higher percentage of financing may be very beneficial when you are looking for the highest amounts possible or generally when you want your chances of getting the amount you urgently need to be higher. 

Relatively High Loan Amounts

You can get up to Ksh2.5 million via the Platinum Credit Logbook Loan which is a fairly high amount compared to the maximum amount of Ksh1 million that is offered by some logbook lenders in this category.

Quick Turnaround Time

The Platinum Logbook Loan processing times are some of the fastest among logbook loan lenders with borrowers receiving their money from as quickly as within 24 hours to a few days.  

Insurance Premium Financing

If you needed a logbook loan but your car was not on a comprehensive insurance cover and you did not have the money to purchase a comprehensive cover, then you cannot qualify for the loan with most logbook loan providers.

Also Read: How to Protect Yourself When Taking a Logbook Loan

With the Platinum Credit Logbook Loan, if you are facing the same challenge, you have the option of getting insurance premium financing (IPF) from the lender which allows you to have comprehensive insurance and pay back in instalments. 

When you need money urgently but are illiquid, this option can be great. Note that getting IPF will also increase your loan amount and as such, the interest you eventually pay at the end of the loan tenure. 

So, make sure you have fully understood the costs involved and ensure they are aligned with your financial situation before you make your decision.

Areas Where the Platinum Logbook Loan Can Improve On

Flat Rate Interest Structure

The Platinum Logbook Loan is offered at an interest rate of 4% on a flat rate interest structure. This means that interest payments are calculated based on the original loan amount. The monthly interest stays the same throughout, even though your outstanding loan reduces over time.

The flat rate interest structure is not unique to the Platinum Credit Logbook Loan and is almost standard across all logbook loan products offered by non-deposit-taking lenders save for a few that may offer reducing balance interest structure.

Note that for non-deposit-taking logbook loan lenders that offer a reducing balance interest structure option, the interest rate is typically much higher than flat rate interest structure which could translate to similar total interest paid by the end of a loan tenure.

That is why it is always important to consider your circumstances, do the math and choose a product that best matches your very unique needs. 

Relatively High Interest Rate

The Platinum Credit Logbook Loan charges an interest rate of 4% per month. The cheapest lender in this category charges 3% per month while the highest prices their logbook loan at 6% per month. 

Note that interest rate alone is not the sole determinant of a loan’s total cost. The total cost is calculated by also including all the other fees such as processing fees to find the true amount you will pay for the loan.

As such, a loan may have a lower interest rate but be more expensive if the other fees associated with the loan are higher as compared to the loan with a higher interest rate.

Monthly Tracker fee

Since the vehicle is what is used to secure a logbook loan, a lender has to make sure that they can access the vehicle (collateral) at any time whenever needed. 

This may be to ensure the vehicle is in good condition since the borrower has the responsibility to maintain the vehicle so it retains its value, or in the event of loan default and the lender needs to trace the vehicle for repossession. 

With the Platinum Credit Logbook Loan, a one-off car tracker installation fee is charged at Ksh5,000. You are also charged a monthly car tracker fee of Ksh1,700. 

While the monthly tracker fee may be lower than what is charged by some logbook loan providers in the industry, there are some lenders that either only charge a one-off fee or do not charge a fee for the tracker at all. 

WRAPPING UP

If you are a business person trying to take advantage of a quick money-making opportunity, are trying to expand your business, or are trying to sort out a personal emergency (businessperson or not), a logbook loan can be one of the quickest ways to raise the money that you need.

The Platinum Credit Logbook Loan is one of the options you can consider. It offers relatively high loan amounts of up to Ksh2.5 million at a monthly interest rate of 4%.

With this lender, you can get some flexibility on your credit history, the age and make of your vehicle, capitalisation and deduction of third party fees and benefit from early repayment without any penalties. 

It, however, charges a relatively high interest rate, has a flat rate interest structure and charges a monthly tracker fee.

To decide whether this is the best loan for you, make sure to consider your personal financial situation (current and foreseeable future), determine your ability to pay and weigh the cons against the pros in light of your very unique circumstances.