From Loaned to Lost
Today marks the fourth day since a Twitter user, Asaad, woke up to find his motorcycle stolen barely 24 hours after he had finished repaying the asset financing loan he had taken with an asset financing company to get the bike.
Unfortunately, he is not the first victim of such an incident. Stories like these continue to surface online, with asset financing cartels allegedly taking back motorcycles after 95% of the loans have been repaid and then crying default and in some cases like Asaad’s, motorcycles are even stolen after borrowers have finished paying with some clients even ending up dead. So what is this cartel?
The Rising Issue of Motorcycle Theft
Theft of motorcycles acquired through asset financing has become a growing concern in recent times. Many individuals who have diligently repaid their loans find themselves victims of motorcycle theft, leaving them in a state of shock and financial loss. These incidents not only highlight the vulnerability of borrowers but also raise questions about the practices of certain asset financing companies.
Understanding Asset Financing
Asset financing is a popular option for individuals seeking to purchase vehicles, including motorcycles. For example, Asaad’s asset financing company- Watu Africa asks for a down payment of Kshs 20,000 to give you the bike and offers flexible payment terms of up to 24 months, providing borrowers with the opportunity to own their desired two-wheeler. The loan packages often include comprehensive insurance and GPS tracking services for added security.
The Modus Operandi of Motorcycle Asset Financing
While asset financing offers convenience and accessibility, there are concerns regarding the practices employed by certain companies. Borrowers have reported exorbitant interest rates of up to 100%, which some consider to be unethical. Asaad’s experience with Watu Africa further exposes questionable practices. Despite the presence of GPS tracking services, the company allegedly refused to assist Asaad in locating his stolen motorcycle, raising suspicions of an inside job.
Watu Africa has now come under scrutiny for these questionable practices. While they claim to provide GPS tracking services for enhanced security, they have actively refused to deliver when Asaad needs them the most, this is despite them easily locating the bike another time when his loan was not repaid. The refusal to help victims of theft and the lack of transparency in repossession procedures raise doubts about the motives and ethics of these companies.
— khalif kairo (@KhalifKairo) May 15, 2023
Challenges Faced by Borrowers
Furthermore, borrowers who opt for asset financing face numerous challenges throughout the loan repayment period. The aforementioned burden of high-interest rates often makes it difficult for them to make timely payments. Additionally, some borrowers experience financial hardships or unforeseen circumstances, leading to missed payments and potential repossession of their motorcycles. The lack of flexibility and understanding from asset financing companies exacerbates these challenges.
Borrowers often find themselves in situations where their rights are not adequately protected. The terms and conditions of the loans may be unclear or hidden within complex legal jargon, leaving borrowers vulnerable to exploitation. There is a need for greater transparency and accountability within the industry to safeguard the interests of borrowers.
In light of these issues, it is essential to understand the rights and protections available to borrowers. Consumer protection laws aim to safeguard the interests of individuals who engage in financial transactions, including asset financing. These laws provide avenues for recourse and legal remedies in cases of unfair practices, breach of contract, or violation of consumer rights.
Borrowers should familiarize themselves with their rights and responsibilities outlined in the loan agreements. They should also be proactive in seeking legal advice or consulting consumer protection agencies if they feel their rights have been violated. By being informed and assertive, borrowers can better protect themselves from potential fraud or unjust actions by asset financing companies.
Solutions and Recommendations
Addressing the issue of motorcycle theft in the context of asset financing requires collaborative efforts from various stakeholders. Here are some potential solutions and recommendations to mitigate this problem:
- Enhanced Security Measures: Asset financing companies should invest in robust and reliable GPS tracking systems to ensure the security and recovery of stolen motorcycles. They should also establish partnerships with law enforcement agencies to expedite the recovery process and not carry out the tracking inhouse only.
- Transparency and Clarity: Asset financing companies should provide clear and transparent terms and conditions to borrowers. They should ensure that borrowers fully understand their rights, responsibilities, and potential consequences in case of default or theft.
- Responsible Lending Practices: Companies should adopt responsible lending practices, including fair interest rates and flexible repayment options that consider the financial capacities of borrowers. This will reduce the risk of default and improve borrower satisfaction.
- Strengthened Legal Framework: The government should review and strengthen existing consumer protection laws to provide stronger safeguards for borrowers. This can include stricter regulations on interest rates, mandatory disclosure of terms, and penalties for non-compliance.
- Public Awareness and Education: Despite these concerns, struggling Kenyans will still run to these companies in search of greener pastures, conducting public awareness campaigns and educational programs can empower borrowers with knowledge about their rights and responsibilities. This will enable them to make informed decisions when engaging in asset financing.
Summing up, the rising cases of asset finances swindling struggling Kenyans brings to light the dark practices of certain companies in the industry. The experiences shared by victims highlight the need for greater transparency, accountability, and consumer protection. It is crucial for borrowers to understand their rights, seeks legal recourse when necessary, and support initiatives that promote responsible lending practices. By addressing these issues collectively, stakeholders can work towards a more secure and fair asset financing system.