In 2021, a Kenyan customer took out a logbook loan with Mogo Kenya to purchase a Nissan Serena, borrowing Ksh 500,000 and contributing Ksh 300,000 of their own money.
The car was initially valued at Ksh 950,000, and the loan agreement included financing for the insurance premium, which was spread out over monthly installments.
At first, everything seemed fine.
The customer paid Ksh 47,000 annually for insurance, included in the monthly payments of Ksh 36,000.
However, the installments began to increase each month due to fluctuations in the dollar, a detail Mogo did not disclose during the loan signing.
The real issues began when the insurance expired at the end of the first year.
The customer was not consulted about the renewal or the new valuation.
Instead, they were informed to pick up the insurance sticker.
Upon checking, they discovered the car had been undervalued from Ksh 950,000 to Ksh 576,000.
Despite this clear depreciation, the loan installments remained unchanged and even increased from Ksh 39,000 to Ksh 43,000 per month.
Penalties for delayed payments further compounded the financial burden.
In 2023, the car’s value was reduced again to Ksh 460,000, yet the customer continued to pay insurance premiums based on the original Ksh 950,000 valuation, amounting to Ksh 47,000 annually.
Over the past two years, the customer estimates they have been overcharged by more than Ksh 9,000 per month due to these discrepancies.
“Hello Cyprian, I need your help. I took a logbook loan with Mogo in 2021. They gave me 500k and I also contributed 300k which they financed for me to buy the Nissan Serena.
Everything went well, and we valued the car according to the report from the valuer, which was 950k.
The insurance was given according to the same report and they also said that they would finance the cover but it was included in the other 500k so that I could pay it monthly along with my installments.
Everything went well in the first year because I was paying 47,000 annual premiums, which was spread out over the twelve months plus the installments, so I was paying 36k.
However, the installments kept growing every month because of the dollar, something they didn’t disclose during the loan signing.
Now my issue is that when the year ended and the car needed another cover since it expired, I was not involved or invited for a discussion but was called to pick up the insurance sticker.
Upon checking the valuation report, it was not shared in the emails, but the car was UNDERVALUED from 950k to 576k.
They never reviewed my loan installments even though the car value was depreciating. Nothing changed; I continued paying the same amount, which even increased from 39k to 43k per month.
If I delayed my installments, I would be heavily penalized. This was in 2022.
In 2023, the car value was again lowered to 460k, but I was still paying insurance premiums based on the first valuation of 950k (47k per year). I will share the screenshots of the M-PESA and the insurance certificate showing the sum insured for the three years.
They have been conning me out of over 9k every month for the last two years!
Imagine looking at this payment schedule, which shows constant insurance premiums but the car value is undervalued every year, while my loan remained the same over the last three years.
When the car value was 950k, the insurance premiums were 47k per year.
Why do I pay 47k again when the car value is 576k and again pay 47k per year when the car is valued at 460k?”
Mogo Kenya’s Track Record
Mogo Kenya, part of the international financial technology company Mogo Finance, has positioned itself as a major player in providing motor vehicle and motorbike loans, claiming to serve over 100,000 customers in the country.
The company prides itself on offering flexible loan terms and quick access to credit, but has faced multiple allegations and criticisms over its lending practices.
In recent years, numerous complaints have emerged regarding their business practices, particularly concerning the transparency and fairness of their loan agreements.
This recent complaint adds to a series of grievances against Mogo Kenya, where customers have reported being misled about loan terms and conditions.
The company’s business model, which heavily relies on logbook loans, has been criticized for its potential to exploit customers who might not fully understand the financial implications of their agreements.
The fact that loan installments did not decrease in line with the depreciating value of the financed vehicles suggests oversight or a deliberate attempt to maximize profit at the customer’s expense.
Given the pattern of complaints, there is a growing call for regulatory bodies to scrutinize Mogo Kenya’s practices more closely.
Customers like the one in this case are urging more stringent regulations to protect borrowers from unfair practices and ensure that financial institutions are held accountable for their actions.
