Mia stopped making repayments for her car loan in December 2021. The reasons for this were not clear, but Mia subsequently lost her job in February 2022 which meant she could not afford her usual loan repayments or to clear the arrears.
The lender tried to contact Mia when she stopped paying her loan but she did not respond to them. The lender said they did not know about Mia’s circumstances until April 2022 when she asked for hardship assistance, but Mia said she told them in February 2022. Further, the lender said Mia told them she had resigned from her job. The information Mia gave us showed that she had not resigned: she had lost her job due to the impacts COVID-19 had on her employer.
In April 2022, Mia agreed with the lender that she would start paying again, but she did not go on to make any payments. Mia blamed the lender for this because they had not arranged a direct debit authority.
In July 2022, the lender repossessed Mia’s vehicle, which was security for the loan, because she was not paying them. Mia said she did not receive the repossession warning notice because her address on it was wrong. The lender said they used the address they had on file.
Mia asked the lender to return her vehicle. She wanted to start making payments but needed the lender to restructure the loan arrears of around $4,000.
The lender did not agree to Mia’s request. They were happy to continue discussions with her, but they believed she could no longer afford the loan and that it was in her best interests for them to sell the vehicle to reduce her indebtedness.
Mia then asked FSCL for help. Mia and the lender had different views on what had happened before her vehicle was repossessed. However, she wanted to pay her loan and have the vehicle returned to her, so she asked for FSCL’s assistance in reaching an agreement with the lender. .
The complaint was resolved at an early stage in our process.
Mia was certain she could afford to pay the lender $95 a week. She was on a low income, $300 a week, but her living expenses were also low. She lived with family, paying only $50 a week board, and she had no other regular expenses. This meant she had $250 a week to pay her loan and personal expenses.
The lender remained concerned about how Mia could afford to pay them $95 a week but they wanted to try and find an amicable outcome to her complaint. The lender proposed that Mia could start paying them $95 a week. If she made four consecutive payments, the lender would restructure the loan and allow Mia to collect the vehicle.
The lender agreed to cover the storage costs for the vehicle, which were $18 a day, from when they received the first $95 payment until Mia collected the vehicle. Mia would be liable for all the storage costs incurred until the lender received her first $95 payment.
Mia agreed to the lender’s proposal. The parties also agreed that Mia could contact FSCL again if the parties were unable to reach a mutual agreement about the loan restructure (if Mia made four consecutive payments).
Mia also acknowledged that if she failed to make the payments, the lender did not have to agree to restructure her loan or allow her to collect the vehicle, and that they could continue their debt recovery action.
Insights for participants
This case is an example of where we helped the parties communicate with each other to agree on an outcome to resolve the complaint.
Mia did not want to continue speaking directly with the lender because she found this intimidating. She also only wanted to communicate by email because she experienced anxiety and panic attacks when speaking over the phone.
Mia wanted us to speak with the lender on her behalf. We could not act for Mia because we are independent of consumers and scheme members. However, we can be a go-between to help parties communicate with each other, either because their relationship has broken down or there is a barrier which makes it difficult for them to communicate with each other.