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A Kenyan court has delivered a stinging blow to Mogo Auto Limited, ruling that the lender charged a customer “exorbitant” and “exploitative” interest on a Ksh400,000 loan — a decision likely to resonate with many Ugandans who have repeatedly complained about the company’s lending practices.Loan Ballooned Beyond RecognitionMogo had sued borrower Aziz Daniel Odoyo in the Thika Small Claims Court, demanding Ksh677,381 plus interest and legal costs over a loan issued in June 2022.According to court documents, Odoyo had already repaid Ksh299,369 before falling into default. Mogo argued that the vehicle used as security had gone missing, preventing it from recovering the balance through a sale.But the court was unimpressed.In a ruling delivered on June 2, 2026, Magistrate Jamlick Muriithi Mwenda said the court could not understand how Mogo arrived at the massive amount it was demanding from the borrower.‘Nothing Short of Exploitative’The judge ruled that the lender’s interest rate — effectively 86.4% before additional charges — was excessive and unlawful.“An effective interest rate of 86.4 per cent, exclusive of additional charges, is nothing short of exploitative,” the court ruled.The court also applied the in duplum rule, a legal principle that prevents lenders from recovering interest that exceeds the original loan principal.That meant Mogo could not legally demand the inflated amount it was claiming.Court Cuts Mogo’s ClaimWhile the court acknowledged that Odoyo still owed money, it drastically reduced the amount payable.Instead of the Ksh677,381 sought by Mogo, the court ordered the borrower to pay only Ksh100,631 plus court-rate interest from the date of the last payment.“Judgement is hereby entered in favour of the claimant for Ksh100,631,” the ruling stated.The rest of Mogo’s claim was dismissed.Ugandan Borrowers Watching CloselyThe ruling is likely to draw attention in Uganda, where Mogo also operates offices and has faced persistent criticism from borrowers over aggressive recovery tactics, high interest rates and hidden charges.For years, some customers have accused the company of trapping borrowers in spiralling debt, especially in motorcycle and car financing deals.Consumer rights advocates say the Kenyan judgement could strengthen calls for tighter regulation of digital and asset-based lenders operating across East Africa.Big Questions for RegulatorsThe case has renewed debate over whether financial regulators are doing enough to protect borrowers from predatory lending.Critics argue that while access to credit is important, lenders should not be allowed to impose interest rates and penalties that push customers into financial ruin.For now, the Thika court’s message was blunt: lenders are entitled to recover genuine debts — but not to turn loans into what the judge effectively described as a cash trap.GOT A HOT STORY? EMAIL: redpeppertips@gmail.com WITH AS MUCH EVIDENCE AS POSSIBLE.SOURCE PROTECTION/CONFIDENTIALITY IS OUR NO.1 PRIORITY.About Post Author
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