A fresh complaint against MyCredit has once again put Kenya’s microfinance sector under scrutiny after a borrower claimed that a KSh150,000 loan spiralled into an alleged debt of KSh393,000 within just four months, even after making repayments totaling KSh200,000.
The borrower also says the company repossessed a vehicle used as collateral, raising fresh concerns about how some lenders calculate outstanding balances and enforce loan recovery.
According to the complainant, only KSh120,000 of the approved KSh150,000 loan was actually disbursed after deductions. However, the borrower says the outstanding amount continued to rise rapidly over the following months.
Despite paying back KSh200,000, the borrower claims the debt kept increasing instead of reducing, before the company moved to repossess the vehicle that had been used to secure the loan.
The borrower says the experience has left many unanswered questions, particularly over how the loan balance allegedly grew so quickly despite significant repayments.
The complainant believes other Kenyans could be facing similar situations and has called for more people with comparable experiences to speak out so that the public can better understand what is happening within parts of the lending industry.
The latest allegations have once again drawn attention to the growing concerns surrounding some digital lenders and microfinance institutions.
While many of these companies have helped thousands of Kenyans access credit when traditional banks are unwilling to lend, complaints about high borrowing costs, deductions before disbursement, rapidly increasing loan balances and aggressive recovery methods continue to emerge.
For many borrowers, the biggest concern is not just defaulting on a loan but the speed at which debts are said to accumulate. Cases where borrowers claim they have paid back amounts exceeding what they originally received, yet still face growing balances and loss of collateral, continue to spark public debate over transparency and fairness in lending.
The latest complaint also echoes another case involving MyCredit Limited that surfaced only months ago.
In that matter, a commercial vehicle owner alleged that his lorry was repossessed after a loan dispute. The borrower claimed he had used the vehicle’s logbook as security and received less money than the approved loan after deductions were made.
According to the earlier complaint, the borrower later fell into arrears and sought court intervention while attempting to negotiate new repayment terms.
However, he alleged that the vehicle was transferred between auctioneers’ yards before eventually being sold at what he believed was far below its market value.
He maintained that the process failed to adequately protect his investment and source of income.
Although the allegations remain claims made by borrowers, the repeated complaints are likely to renew calls for closer oversight of lending practices in Kenya’s microfinance sector.
Consumer rights advocates have repeatedly argued that borrowers deserve clear information on deductions, interest charges, penalties and the full cost of credit before signing loan agreements.
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