You know that feeling when you’re at the supermarket, your cart is full of goodies, but when you reach the checkout your M-PESA balance is lower than your cravings? We’ve all been there.
Before you reluctantly return items to the shelves, there’s a quick and easy solution – the Safaricom Faraja loan!
With just a few taps on your phone, you can get approved for an interest-free Faraja loan and make your purchases as long as you are within your credit limit and are in approved stores. No collateral required.
So read on to learn how Faraja loans work and how you can get up to KES 100,000 in minutes. Let’s dive in.
Also Read: Why is my Fuliza Loan Not Growing
What is Safaricom Faraja Loan and How does it Work?
Let’s break it down – You can use Faraja to grab groceries and buy appliances – whatever you need the money for. And you don’t pay any interest or extra fees! How sweet is that?
Here’s how it works – Faraja lets you borrow between Ksh 20 to Ksh 100,000 to pay for stuff using M-PESA. Next time you’re at Naivas, Quickmart, or your local shops, just ask if they accept Faraja loans.
It’s brought to you by Pastor Julian Kyula’s company EDOMX, alongside Equity Bank and Safaricom. So you know Faraja’s got trust and credibility behind it.
According to Kyula:
“We begin with Kenya, but our eyes are on the global market because innovative concepts such as Faraja will go a long way in encouraging creativity in the digital financial sector to fulfil inclusivity goals and true sector deepening.”
A Case Example of Faraja Loan
Let’s walk through an example to understand how Faraja loans work.
Say you want to buy a new TV from Naivas that costs Ksh 40,000. This purchase is beyond your current budget.
With a Faraja loan, you can borrow the Ksh 40,000 to pay for the TV upfront. Faraja will provide the loan amount instantly if you qualify.
Now when you go to Naivas and buy the Ksh 40,000 TV with your M-PESA, here’s what happens behind the scenes:
- Faraja charges the merchant a 10% transaction fee. So on a Ksh 40,000 purchase, their fee is Ksh 4,000.
- This means Naivas receives Ksh 36,000 from your M-PESA for the TV payment. The Ksh 4,000 goes to Faraja.
- But you must repay the full Ksh 40,000 loan amount to Faraja within 30 days. No interest or additional fees.
- Faraja’s 10% merchant fee allows them to provide you the loan at zero interest and flexible repayment terms.
How do I Qualify for Faraja Loan?
To qualify for a Faraja loan, applicants must meet certain criteria:
- You need an active Safaricom MPESA line. This allows Faraja to assess your usage and creditworthiness.
- A valid national ID is required. Faraja will verify your identity before approving loans.
- Faraja considers your credit history and performs risk analysis. They evaluate factors like:
– How long you’ve been an MPESA customer
– Your average MPESA account balance
– Past loan repayment behavior
– Frequency of airtime and data purchases
– Income sources and stability
- Based on this credit profiling, Faraja decides whether to approve a loan and determines your credit limit. Customers deemed lower risk receive higher loan amounts and limits.
- There is no minimum income level. But you must demonstrate creditworthiness and ability to repay loans.
- Having an existing M-Shwari, KCB Mpesa, or other digital loan in good standing can help your Faraja application. This establishes you as a responsible borrower.
How to Apply for Safaricom Faraja Loan
Safaricom CEO, Peter Ndegwa says:
“We are glad to partner with EDOMx to offer Faraja empowering any business to grow their sales by enabling their customers to buy now and pay later.”
How to Apply for Safaricome Faraja Loan Infographic
To start using Faraja, you first need to register for the service:
- Dial *799# on your Safaricom mobile number
- Choose to opt-in and enter your M-PESA PIN
- Faraja will conduct a credit check and allocate your loan limit
- You’ll receive a confirmation SMS with your approved Faraja limit
Once registered, you can access Faraja loans to make purchases in a few simple steps:
- When paying at a shop, confirm if they accept Faraja
- Dial *799# and select “Buy Goods and Services”
- Enter the amount you wish to borrow as your Faraja loan
- Input your M-PESA PIN to confirm
- You will receive an SMS confirming the purchase
How do I Pay Back Faraja Loan and What’s the Payment Period?
You have one month to repay what you borrowed through *799#. Pay back in instalments or clear the full amount at once. Just be sure to settle before the repayment deadline to avoid extra costs.
To repay your Faraja loan:
How to Pay Back Safaricom Faraja Loan
| Step | Description |
|---|---|
| 1. | Dial *799# on the same Safaricom number you used to take the loan. |
| 2. | Select “Lipa Loan” to pay your outstanding Faraja amount. |
| 3. | Enter the cash amount you want to repay. |
| 4. | Input your M-PESA PIN to confirm. |
| 5. | You will receive an SMS confirming repayment to Faraja. |
| 6. | The repaid loan amount is deducted from your M-PESA balance. |
| 7. | You can repay in parts or in full before the 30-day term. |
Key Takeaway: Is Faraja Loan Worth It?
Overall, the Safaricom Faraja loan provides an accessible financing option with some clear advantages. The ability to get instant credit for purchases without collateral or interest can be useful for consumers with urgent needs and tighter budgets. Faraja’s digitized application and repayment system is also convenient.
However, borrowers should carefully weigh the 30 day repayment period and ensure they have funds on hand to pay the full amount and avoid penalties. Faraja’s credit limits may also be too low for major purchases.
