The Small Claims Court has ruled against vehicle financing company MOGO after declaring its demand for KSh 976,750 on a KSh 400,000 loan to be unlawful.
The borrower had taken a loan of KSh 400,000 and had already repaid KSh 299,369.
However, MOGO claimed the borrower still owed KSh 677,381 and demanded a total repayment of KSh 976,750 to clear the loan.
In its judgment, the court found that MOGO’s effective interest rate of about 86.4 percent, together with additional charges, was exploitative and oppressive.
The court also held that MOGO failed to justify the penalties, monitoring fees, insurance charges, and other amounts it had claimed because it did not provide a clear basis for how the figures were calculated.
Applying the in duplum rule, which provides that unpaid interest cannot exceed the principal amount advanced, the court rejected MOGO’s inflated claim.
Instead, the court entered judgment for KSh 100,631, being the outstanding balance after deducting the borrower’s repayments, together with court-rate interest and costs.
The ruling is expected to have significant implications for disputes involving high-interest digital and asset-financing loans in Kenya.
