Insights for consumers
If you are paying a vehicle loan, make sure your insurance cover is up to date for the entire term of the loan. Your lender will usually require this, but you are responsible for making sure premiums are paid and that the policy stays active.
It is also helpful to keep clear records of any repairs you complete, especially if the vehicle has been in an accident. Accurate information about the vehicle’s condition can make it easier to resolve any concerns later, including concerns about damage that may occur during repossession.
Insights for lenders
Maintain accurate records of all communication with borrowers. Ensure that notices are sent to the correct address, and confirm that email contact details remain current. This reduces the likelihood of misunderstandings.
When repossessing a vehicle, comprehensive photographs and videos support transparency and can help give information about the vehicle’s condition if concerns are raised.
Mira’s business loans money to purchase vehicle
Mira*’s company entered into a business loan agreement with a lender in April 2022 to buy a used vehicle. Mira personally guaranteed the loan.
Vehicle is damaged twice
In mid-2022, the vehicle was damaged while parked. Mira made an insurance claim, that was paid. In July 2023, the vehicle was involved in a second accident, causing substantial damage. By that time, the insurance on the vehicle had lapsed. Mira decided to repair the vehicle herself and bought parts in April 2024.
Loan falls into arrears
In July 2024, the lender issued pre‑repossession notices because the loan was in arrears. The lender later acknowledged that the notices were posted to an incorrect street address, but the notices were also emailed to the address Mira had provided when the loan was arranged.
Vehicle is repossessed
The vehicle was repossessed in September 2024. Mira and the lender provided photographs and videos of the repossession process. Post‑repossession notices were issued and emailed to Mira. The vehicle was sold by an auction house in early 2025. The sale proceeds were applied to the loan account, but Mira still owed money to the lender.
Mira claims the vehicle is damaged further during repossession
Mira said that the lender’s repossession agent had damaged the vehicle when the agent pulled it off the jack, allowing it to crash onto the ground. She also said that the lender was responsible for her insurance policy lapsing, resulting in no cover after the 2024 accident.
Unable to resolve her complaint with the lender, Mira complained to Financial Services Complaints Ltd (FSCL).
FSCL’s investigation
We acknowledged that the repossession process may have been difficult for Mira, especially given the work she said she had completed after the 2023 accident.
The videos showed that minor damage likely occurred during repossession, including scraping to the front of the vehicle and possible radiator damage. However, the vehicle had significant pre‑existing damage, and Mira did not provide information about the repairs she completed before repossession. We were not able to determine whether any other damage occurred during repossession or whether any such damage would have affected the vehicle’s sale price. We did not consider it likely that the minor damage identified would have materially changed the sale price.
Regarding insurance, the loan terms required the borrower to maintain insurance. The lender was not responsible for paying or managing the premiums.
For these reasons, we considered it fair for Mira to discontinue the complaint.
What was the outcome of FSCL’s investigation?
We issued a preliminary decision suggesting that Mira discontinue the complaint. Mira did not respond, and we closed our file.
