Insights for consumers
When taking out a loan, read the loan documents carefully before signing. Take time to understand the agreement and ask questions if you are unsure about anything. This may prevent misunderstandings later.
Niko takes out a loan to buy a vehicle
In July 2022, Niko* bought a vehicle using finance from a lender. Niko said that a clerk at the car dealership told him the vehicle would cost $6,800 and that he would end up repaying less than $9,000 in total.
Niko doesn’t read the loan documents
Niko explained that this was his first time getting finance, and he was desperate for a vehicle. He relied on what the clerk said and signed the loan documents without reading them.
Niko discovers the loan is double the expected amount
Later, Niko learned that the total loan amount was $18,000, not $9,000. By the time he raised his concerns, he no longer had the vehicle because it had been stolen.
Niko seeks a solution with the lender
Niko asked the lender to waive the remaining balance on his loan, which was approximately $5,500. When he could not resolve the matter with the lender, he complained to Financial Services Complaints Ltd (FSCL).
FSCL investigates the complaint
We reviewed the loan agreement, disclosure documents, and information provided by the lender. We determined that the lender had adequately disclosed the loan amount, fees, interest, and total amount payable. The total repayment figure of $18,000 was clearly highlighted in the agreement. The lender also noted that borrowers were required to watch a plain language video on loan agreements before signing.
During several calls with his case manager, Niko acknowledged that he was desperate for a vehicle at the time and chose not to read the loan documents carefully, relying instead on what the dealership told him. We explained to Niko that borrowers are responsible for reading and understanding the documents they sign.
The mystery loan amount
All parties, including FSCL, were unable to understand how the dealership could have arrived at a total repayment amount of $9,000, if this was said, based on the figures in the agreement.
Our view was that the lender had acted fairly, as they had provided a clearly written disclosure.
How was the complaint resolved?
Although the lender stood by the accuracy of the disclosure document, they acknowledged Niko’s excellent payment history since taking out the loan. As a goodwill gesture, the lender offered a $1,000 credit to Niko’s outstanding balance. Niko accepted this offer, and we closed our file.
