EDITOR'S NOTE: This article is a part of our Money254 Partner Series and is produced in partnership with LendPlus Kenya. For more on Money254’s editorial policy, read here.
Think about it. You were in an emergency situation, or you were chasing a quick money-making deal or you needed to pay an urgent bill, and lucky for you, there was a digital lender willing to advance you the cash you needed to this end.
But things have been delayed, the emergency demanded more money and you are not liquid yet, your money deal is still a few days or weeks from paying off, your salary is delayed or you still are attending to other matters. But, your digital loan balance is now due.
You are about to enter into default.
Don't you wish you had known if this digital lender would allow you to extend your loan repayment period so that you have more breathing room to put your house in order?
I mean, it’s not like you do not have the ability to repay per se. You just have some priorities that are important to you and the ability to extend your loan tenure would really be a shot in the arm.
Now, in this respect, there are generally two types of lenders. Those that have a fixed loan tenure beyond which a penalty is charged, and those that allow you to extend your repayment before you get into default saving you any penalties.
The good news is that while few, there are quite a number of digital lenders who allow loan repayment extensions making them a good choice for borrowers who may be facing tough times, or those with irregular income such as small-scale business people who may have to wait for creditors to pay or even employees who sometimes may get their salaries delayed.
Today, we discuss the only digital lenders in Kenya that have a loan repayment period extension feature
LendPlus is a digital loan offering instant digital loans from a minimum of Ksh500 and a maximum limit of Ksh30,000 at a daily interest rate of 2% for a maximum tenure of 30 days.
It is one of the few digital lenders that allow borrowers to extend their loan repayment period if they are facing challenges repaying on time.
LendPlus says you may extend your loan repayment period to give you more time to look for the money to repay back. You can do this by yourself on the app or alternatively contact the customer service centre for assistance via 0709 029 000.
One great thing about this feature is that you can actually extend your repayment period by up to the number of days your loan was due. For example, if your loan was to be repaid in 30 days, you could push your repayment by another 30 days.
LendPlus says that customers are allowed to extend the repayment period several times.
For your repayment extension to be approved, you have to pay the interest accrued for the period in question, not the principal.
To fully take advantage of the LendPlus Digital Loan extension feature, you need to request for an extension before your loan is overdue. That is before the due date or even on the due date as long as you do not exceed it.
If you do this, you will be able to extend your loan with no extension fee since all you need to repay is the interest that has accumulated over the period. Effectively the loan gets extended to become a 60-day loan if you originally had taken a 30-day loan and opted for a full tenure extension.
In this regard, LendPlus stands out as the only digital lender to offer extension without an extension fee attached.
If you are late to apply for an extension, you get a one-day grace period to do so at no extra cost but if you delay with a second day, you will be charged a 2% fee for that day. The 2% fee is also applied to the second day of default but from the third day onwards no fee is charged.
Note that when you extend your LendPlus Digital loan repayment date, as we mentioned in the above example, you effectively are converting your 30-day loan to a 60-day loan if you choose the maximum allowable extension period. This means you will also incur the daily fee of 2% for the extended period.
It is important to mention that LendPlus is also one of the few digital lenders that allows you to choose the loan tenure that best suits your needs from a minimum of 5 days to a maximum of 30 days.
As such, if your reason for extending the loan is that one of your debtors delayed in paying you and you are sure they will pay in 5 days, you can simply extend your loan by 5 days instead of the full 30 days and reduce the eventual total cost.
Learn More>> Interest Calculation on LendPlus Loan Repayment Extension
Zenka is a digital loan app that offers digital loans of between Ksh500 and Ksh42,000 for a maximum duration of 61 days. The loan costs a minimum of 9% per loan and a maximum of 39% per loan depending on the loan amount and duration.
If you fail to make your Zenka loan repayment on time, you will be charged a 1% penalty rate of the amount borrowed (principal) every day you fail to repay the loan after the repayment period lapses. The amount adds up each day until you pay up the outstanding loan.
To avoid this, when you have determined you may not be able to repay your loan on time, go to your Zenka Digital loan app and choose the ‘Need more time to repay’ option which allows you to choose between 7, 14, and 30 days of repayment extension.
The app will display for you the additional cost your loan will attract which will be significantly much lower than if you were to be charged the 1% daily penalty for lateness which is the default option.
Zash is a digital loan app that offers digital loans of between Ksh500 and Ksh50,000 for a total cost of 25% per loan. Zash Loan offers loans for a minimum duration of 7 days and a maximum duration of 14 days.
If you fail to repay a Zash Loan on time, you will be charged a daily late fee of 2.5% of the borrowed amount.
But this is a totally avoidable cost if you simply request for a loan repayment extension. Zash says that you can request an extension period equivalent to the duration of your loan for a “small fee”.
To request an extension, Zash says you will need to contact them to "open extension". After they have "opened extension", you must login to the Zash Loan app, and apply for extension on the home page and pay the extension fee within 24 hrs.
“Once you extend your loan, you won't be charged an overdue fee for the period of extension and we will not start the collection process until the end of the extension period.”
Tala is a digital loan app that offers digital loans of between Ksh1,000 and Ksh50,000 for a maximum tenure of 30 days. It charges a daily fee of 0.3%.
If you are facing challenges repaying your Tala loan on time, Tala offers you a chance to extend your loan being the original due date.
If you choose this option, Tala says you will be charged a one-time 8% extension fee and no other fees will be charged regardless of the period it takes you to repay this loan.
Timiza is a mobile banking solution offered by Absa Bank Kenya that not only serves as a mobile loan app open to everybody including non-Absa Bank account holders, but you can also save, make bill payments, buy airtime and more.
On Timiza, you can borrow loans of between Ksh1,000 and Ksh150,000 at a total cost of 7.25% per loan for a fixed tenure of 30 days. This is the lowest loan cost for a digital loan open to everyone irrespective of which bank account they have.
If you are experiencing challenges repaying your loan within the set 30 days, your loan repayment period will be extended for an additional 30 days but you will be charged an additional 5% Roll-Over fee on your outstanding loan balance.
Note that once your loan is extended, you are listed under arrears by the CRB until the 60th day. If you still don't pay after the 60th day, you are listed as a defaulter.
Mokash is a digital loan app that offers digital loans of between Ksh2,000 and Ksh30,000 at an interest rate of 26% per loan. The loan tenure for Mokash loans is between 7 days and 14 days.
If your Mokash digital loan is almost due and you realise you may not be able to repay it in full on time you can request an extension where you only pay the interest accrued and an extension fee.
Once a loan is disbursed, the Mokash digital loan app offers you two repayment options; one is “Make Full Payment” and the second option is “Pay Interest Only”. It is the “Pay Interest Only” option that takes you to the loan extension option.
Once you have paid the interest accrued up to the point of requesting an extension, your extension should be approved, but you will be charged a loan extension fee.
This is compared to failing to request an extension where late MoKash loan repayments automatically incur a fee of 2% per day as well as an inability to get subsequent or larger MoKash loans.
As we have clearly seen from the majority of the digital loan apps above, there is an obvious cost saving in requesting a loan extension as opposed to leaving your loan to fall into default.
It is thus a no-brainer that whenever you are facing challenges repaying a digital loan and your loan app of choice offers this option, you should go for it to save on the eventual total cost of that credit.
Here are some more advantages;
The biggest disadvantage of extending your loan tenure for most lenders listed here is the fact that you will end up paying more than you would have had you cleared your loan on time. This is because while some may not charge an extension fee, you are liable to pay the interest that will accumulate over the extension period.
So, if the additional interest you are going to pay when you extend the loan outweighs the benefits of extending the loan, you may want to repay the loan in full by the due date. Otherwise, extending the loan to give you breathing time to get the money to clear the balance still makes sense.
Take your time to decide which option works best for your very unique circumstances. When it comes to your personal finances, there is no one-size-fits-all.
Sometimes things do not always go as planned. It is a fact of life. And if you are not well prepared for uncertainties, you may find yourself in a great deal of turmoil that could spiral into financial trouble.
When it comes to loans, the biggest factor to consider before borrowing is your ability to repay. Even digital lenders such as LendPlus make an assessment of your ability to repay before determining how much you can qualify for or whether you qualify at all. So why would you not make this determination for yourself?
Now, if you estimate there may be some situations or incidents that may come in the way of you repaying your digital loan on time, it may be a wise thing to then choose digital lenders that can allow you to extend your repayment period at little or no cost.
So far, the above are the only digital lenders reviewed by Money254 that allow a straightforward repayment extension for their customers.
The ability to extend your loan repayment period has several advantages including avoiding being listed in the CRB - once fully licensed, all digital lenders will be allowed to list defaulters of loans above Ksh1,000 - the peace of mind of a longer repayment period and the ability to rearrange your finances with no pressure to repay a loan instantly.
We will continue updating this list as we review more digital loan apps and discover more that have a loan repayment extension feature or if some existing loan apps introduce this.