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Car at risk

Campbell borrowed money from a lender to buy a car. There were no problems repaying the loan until he moved to Australia. While Campbell continued to pay the loan from Australia, the payments were erratic. After Campbell missed three payments in a row the lender decided to repossess the car, and discovered it was not where they expected it to be. It transpired that Campbell had sold the car. The lender located and repossessed the car without going through the usual repossession warning notice process.

The person who bought the car from Campbell contacted him, very angry that the car she had bought had been taken by repossession agents. Campbell returned the money to the purchaser and asked the lender to give him the car back. Campbell promised to recommence payments. He explained that he did not know that he could not sell the car while he still owed money to the lender.

The lender was unsympathetic and said it intended to sell the car as soon as possible. Campbell complained to FSCL.



Campbell said that although he was living in Australia, he planned on returning to New Zealand soon and wanted to keep the car. The three missed payments were as the result of a bank glitch and he would be happy to catch up the arrears if the lender would agree to give him the car back. Campbell said he simply did not know that he should not have sold the car.

The lender responded that as soon as Campbell sold the car, it was entitled to treat the security as “at risk” and repossess and sell the car to reduce Campbell’s debt.



There was no dispute that Campbell had defaulted on his obligations under the loan agreement. He had failed to make payments on time, not kept the car in his possession, and had sold the car. We explained that the lender was entitled to call up the loan entirely requiring Campbell to pay the full amount outstanding, approximately $6,000, if he wanted to keep the car. Campbell could not afford that amount, but wanted to keep the car and said his mother would look after it for him until he came back to New Zealand.

After talking to Campbell we went back to the lender and asked whether it would be prepared to reinstate the loan agreement. The lender agreed, provided Campbell agreed to:

  • pay the arrears
  • provide his mother’s driver’s licence and contact details
  • provide a certificate of currency, showing the car was insured
  • provide his own contact details
  • agree to have a GPS/immobiliser fitted, at no cost
  • pay for the GPS/immobiliser monitoring.

We told Campbell that we considered the lender’s offer to be reasonable. It was under no obligation to negotiate and could have insisted that the full amount of the loan balance be paid before returning the car.



Campbell said that he could not agree to having the GPS/immobiliser fitted, and if the lender did not agree to forgo this condition the only other option was for the car to be sold. The lender was not prepared to negotiate on the GPS/immobiliser condition, so we advised Campbell that we were unable to help any further.


Insights for consumers

Generally, if you miss some loan repayments the lender will issue a repossession warning notice, giving you 15 days to pay the arrears. However, if you have sold the car that is securing the loan, the lender can repossess the car without warning. If you want the car back, you will have to pay the full amount outstanding.