This archive report was first published on 25 July 2019.
On July 25, 2019, the Consumer Federation of Kenya (Cofek) filed a lawsuit against Toyota Kenya Ltd, alleging that the company's in-house financier, Tsusho Capital Ltd, had failed to comply with the interest rate cap set by the Central Bank of Kenya.
According to Cofek, Tsusho Capital had been charging interest rates of up to 22 percent, which is above the legal limit of 14 percent. The federation is seeking to hold Toyota Kenya Ltd liable for the high interest rates, claiming that the company had compelled its clients to use Tsusho Capital as financiers.
Toyota Kenya Ltd has been accused of breaking the rate ceiling in car loans, with the Consumer Federation of Kenya seeking compensation for affected buyers.
Tsusho Capital Ltd, in its defense, argued that it was not a bank regulated by the Central Bank of Kenya and therefore not obligated to follow the interest rate cap. The company claimed that it operated solely on the principles of contract, where it entered into financing agreements with customers on terms and conditions contained in the agreement.
The case highlights the ongoing debate over the interest rate cap in Kenya, with some companies arguing that it restricts their ability to offer competitive loans to customers.
