Tala Loans: Introducing Line Of Credit (LOC),What to Expect

Tala is introducing Line Of Credit (LOC) loans to borrowers in Kenya. What does this mean and what will be the impact?

Tala Logo 

In this article I will be sharing the new Tala Line of Credit Loans details and what to expect.

What is a Line Of Credit (LOC)

According to debt dot org, a line of credit is a pre-approved loan that allows you to get money when you need it and not all at once. 

So, in this regard, it simply means Tala will be giving you loans at any given time if you've not yet exceeded your allocated loan limit in that month ( within 30 days).

This is something Tala talked about back. Here is an article about tala introducing top up loans. 

Tala Line Of Credit Loans Explained 

Tala App Play Store Screenshot 

So, how do Tala line of credit loans work? 

This is not a new idea at all in Kenya. Since inception, Fuliza Mpesa Loans have been applying the line of credit mode in supplying loans. Borrower's were able to Fuliza as much as they want till the allocated limit gets exhausted. 

Another is Credit Card 💳. With a credit card, a customer can transact with the card until the approved limit is depleted. 

Till here, you should now be aware of how Tala loans will work now. 

Let however, have a small example of how tala loan - line of credit works.

When a customer signs up incase you're new or logs in for existing clients, the app will give you a loan limit instantly.

If you decide to take the loan , you'll have up to 30 days to pay back. If you decide not to take the loan, you'll be allocated a different or same loan limit during next login.

Now ,if you decide to take the loan, you'll have the option of taking the full amount or take a fraction of it. 

Before,Tala used to remove the amount you chose not take from your account till you make the loan repayment in 30 days.

Now that Tala is a line of credit,if you chose to take a fraction of the loan limit allocated, the remaining portion will still be available to take till the loan limit is depleted within 30 days.

For example, if your Tala loan limit is ksh 10,000 you can choose to take ksh 5000 then ksh 5000 again before the 30 days come to an end.

You can also choose to take ksh 2000 five times within the 30 days or whichever suits you best. The options are unlimited.

How serious is Tala about line of credit loans

Tala is so serious about providing personal line of credit loans in such a way that, it's trying to distance itself from other loan apps which are still following the old way of giving credit.

On Google play store,Tala wrote a disclaimer which reads;

Tala is not a bank or a personal loan app. Instead, we provide personal lines of credit to consumers. Tala is not associated with online mobile cash loan apps in Kenya, such as Zenka, Branch, Timiza, Okash, MKopa, Fuliza, Kashway, MShwari, Zash, Ipesa, Mkopo Haraka, Kopesha, Asap, Creditmoja, Hustler fund, Credit Hela, Equity Bank app or Mkopo Rahisi.

What to expect from Tala loans

By moving to the line of credit mode of providing loans, I think Tala loans will be giving a new good experience.

A customer will now be able to take what he or she needs at that time without worrying about the remaining loan amount disappearing like before.

Conclusion

Tala's personal line of credit loans will serve as a new breakthrough for short term mobile loans in Kenya. 

This will bring to en end the idea where borrowers were forced to take a loan amount they actually didn't need at the moment in order to cater for unexpected financial emergencies in days to come.

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