In January 2022, Bati took out a car loan for $120 per week. Days later, Bati’s relationship broke down and his partner left, meaning he had no choice but to give up his night-shift job to stay at home with his children. In late January 2022, Bati told the car dealership about his change in circumstances, that he couldn’t afford the loan, and that he wanted to cancel the loan. The dealership told Bati it was too late to cancel the loan contract (that period being only 5 days) but that they could reduce the loan amount by $1,000 for him.
A year later, Bati was in very serious financial hardship. He was unemployed but had honoured every payment to the lender using his benefit. He had very little money to support himself and his children and they were living in inadequate accommodation.
Bati complained to FSCL saying that the loan should have been cancelled when he asked.
Dispute
Bati complained that the lender should have cancelled his contract. He said repaying the loan had been extremely stressful and he and his children were struggling daily to make ends meet.
The lender was sympathetic to Bati’s situation but said that Bati had told the car dealership of his change in circumstances, mistaking them as the lender. They said that neither Bati nor the dealership ever contacted them about Bati’s change of circumstances, and they never received the request to cancel the loan.
Review
We asked the lender to provide their records and those of the dealership, as their agent to show that they had given adequate disclosure to Bati, including disclosure about the right to cancel the contract. Upon review, and recognising Bati’s particular personal circumstances and the stress he was under, the lender offered to refund all the payments Bati had made over the life of the loan if he agreed to surrender his car.
Resolution
Bati accepted the lender’s offer. He surrendered his car and received a refund of $10,680, so we closed our file.
Insights for consumers
This case did not need to be fully investigated by FSCL. The lender was willing to consider Bati’s personal situation and offer a fair resolution. It was encouraging to see the lender prepared to ‘put things right’.
This case is a helpful reminder for lenders who deal with customers through agents (like car dealerships), that agents need to be familiar with consumer credit law. This includes agents ensuring disclosure requirements are met, particularly disclosure around cancellation rights.
