M-Shwari is a revolutionary mobile-based banking service in Kenya that has been changing the financial landscape since its launch in 2012. The service was launched by Safaricom, Kenya’s leading mobile network operator, in partnership with Commercial Bank of Africa (CBA). M-Shwari is a Swahili word meaning “to save,” and the service lives up to its name by allowing users to save, borrow, and access other financial services via their mobile phones. The loans are unsecured, which means that borrowers do not need to provide any collateral. The service is available to all Safaricom subscribers who are registered on M-PESA, the mobile money service offered by Safaricom.
Basic Eligibility Requirements
To be eligible for an M-Shwari loan, a user must meet certain requirements, including:
1. Age limit and citizenship requirements. The borrower must be a Kenyan citizen or a resident in Kenya. The borrower must be over 18 years of age.
2. Possession of an M-PESA account. The borrower must have an M-PESA account that has been active for at least six months. The borrower must have a good credit history on M-PESA.
3. Regular savings on M-Shwari. The borrower must have saved regularly on M-Shwari for at least three months.
Meeting these eligibility requirements is crucial for getting approved for an M-Shwari loan. The eligibility criteria are designed to ensure that only those who can repay the loan are approved. By meeting the criteria, the borrower demonstrates a level of financial discipline, which is important when it comes to borrowing money.
How To Apply For an M-Shwari Loan
The application process for an M-Shwari loan is straightforward and can be done entirely through a user’s mobile phone. Borrowers can access loans of up to Kshs. 50,000 by simply dialing *234# and following the prompts on their screen. The loan application is processed instantly, and once approved, the money is disbursed to the borrower’s M-PESA account immediately. This makes the M-Shwari loan service ideal for emergencies or unexpected expenses.
How To Repay Your M-Shwari Loan
The repayment process for M-Shwari loans is also straightforward. The loan is automatically repaid from the borrower’s M-PESA account over a period of up to 30 days, depending on the loan amount and the user’s repayment history. If the borrower defaults on the loan, they may face penalties, which can affect their credit score and their ability to access credit in the future.
Maximum Loan Amount Available and Interest Rates
The maximum loan amount available to borrowers on M-Shwari is determined by their creditworthiness. The more regularly the borrower saves on M-Shwari, the higher the loan limit they can access. The maximum loan amount available on M-Shwari is Ksh. 50,000.
The interest rates for M-Shwari loans are competitive and lower than those of traditional banks. The interest rate for M-Shwari loans is 7.5% per month on the reducing balance. This means that the interest charged decreases as the borrower repays the loan, resulting in a lower total interest cost.
How To Avoiding Debt with M-Shwari Loans
To avoid falling into debt with M-Shwari loans, there are several tips borrowers can follow, including:
1. Borrow only what is necessary. Borrowing more than necessary can lead to difficulty repaying the loan, leading to debt.
2. Repay the loan on time. Late payment fees can add up, making it more challenging to repay the loan and leading to debt.
3. Save regularly on M-Shwari. Regular savings on M-Shwari can increase the borrower’s creditworthiness, making it easier to access higher loan amounts with better interest rates.
4. Create a budget. Creating a budget can help borrowers keep track of their expenses and avoid overspending.
Conclusion
In conclusion, M-Shwari loans offer a convenient way to borrow money quickly and easily. However, high-interest rates and limited loan amounts are two significant drawbacks of these loans. To avoid falling into debt with M-Shwari loans, borrowers should only borrow what is necessary, repay the loan on time, save regularly on M-Shwari, and create a budget. By following these tips, borrowers can avoid falling into debt and enjoy the benefits of M-Shwari loans.
