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Affordability assessment mistake

In March 2021 Finn wanted to buy a car. Because Finn’s income was not enough to meet the lending criteria the dealer asked if anyone could join him as a co-borrower. Finn’s father Murray agreed.

Finn received a weekly benefit income of $1,075 to support himself and his three children. After deducting Finn’s expenses including rent of $605 a week and debt repayments, Finn had $332 left over for food and all other living costs. Murray had regular weekly income of $725, lived separately from Finn, and only needed to support himself.

When the lender assessed affordability, it recorded that Finn was paying $605 a fortnight for rent. The lender was satisfied that the loan was affordable and approved the loan application. Finn and Murray agreed to repay the loan at $171 a week.

Finn missed the first two loan repayments and made sporadic payments over the following year. When the lender was unable to reach Finn to discuss the poor payment history, it contacted Murray who said that he did not agree to make the payments. The lender then repossessed the car.

Finn went to WINZ for help. WINZ agreed to repay the arrears and Finn set up an automatic payment coming from his benefit to make sure he did not miss any more payments. The lender agreed to return the car.

Finn made consistent payments for about a year, but then the car was stolen. Because the car insurance had lapsed, Finn asked the lender if they could locate the car using the GPS in the immobiliser. The lender located the car in another city. Finn asked if the lender could repossess the car and the lender agreed.

The lender’s repossession agent found the car and brought the car back to an auction house’s yard. The lender was concerned that the car was uninsured, and refused to release the car until Finn paid the insurance and the repossession costs. After some negotiation, the lender agreed to cover the repossession costs if Finn would pay for 12 months’ insurance. Finn said this was unreasonable and complained to FSCL.


Finn said that when he bought the car the lender told him that one of the benefits of the immobiliser device was that if the car was ever stolen the lender would be able to locate it. Finn said that it had taken the lender a long time to recover the car and then, when it was found, they charged him for the recovery costs.

Finn said he could not afford to pay for the car to be insured, and that there was little point insuring the car because it was unregistered and did not have a current warrant of fitness because he could not afford these costs.

The lender said their proposed resolution was reasonable. It was a loan condition that the car be insured, warranted, and registered. Finn had not met his obligations under the loan agreement. The lender considered they had acted fairly by agreeing to locate and repossess the car and that it was only reasonable that Finn cover these costs. As a gesture of goodwill, the lender was prepared to pay the repossession costs of about $1,400 if Finn would insure, register, and warrant the car.


At first, we thought the lender’s offer seemed reasonable. Under the loan agreement, Finn was obliged to warrant, register, and insure his car. The lender had incurred legitimate costs repossessing the car that Finn was liable to pay if he wanted the car back.

However, when we spoke to Finn, he explained that he had been struggling to pay the loan from the beginning and although he had been making the payments recently, this was only because the money was coming directly out of his benefit. Finn said that he had been unable to properly feed his children as a result.

Our case manager asked the lender for their loan affordability assessment and noticed that the lender had calculated affordability based on rent of $605 a fortnight, when in fact rent of $605 a week was being deducted from Finn’s benefit. Our case manager suggested the lender review their response to the complaint.


The lender agreed they had made a mistake when assessing Finn’s rent and that the loan was not affordable. The lender agreed to refund all the interest and fees that Finn had paid, which is the appropriate remedy under the Credit Contracts and Consumer Finance Act 2003.

After the interest and fees were refunded the loan was about $4,000 in credit. The lender offered to refund the $4,000 to Finn and Murray and allow Finn to keep the car. Finn and Murray were very happy with this outcome and accepted the lender’s offer.

Insights for consumers

When Finn came to us with this complaint, he had a real sense of grievance. Finn felt as though something had gone wrong, but he was having problems explaining himself to the lender. When Finn said he’d been having problems from the very beginning we asked for more information and discovered the rent had been incorrectly recorded in the affordability assessment. Once the error was discovered the lender was quick to put things right.