How much for the mystery machine?

Jane and Eric applied for finance to buy a 7-seater SUV. They approached a friendly car dealer who convinced them to apply for finance from a different company to the one Eric and Jane were familiar with.

The loan application was approved in Eric’s name, and Eric and Jane took possession of the SUV.

Jane and Eric had some difficulty meeting their payments after Eric left his job. Jane contacted the finance company to ask them to unwind the loan contract; she and Eric no longer wanted the van. Jane complained that the loan application should not have been approved.

Jane explained that her husband did not speak English. The car dealer misled them and gave them a car loan they could not afford and took advantage of their desperation. In particular, the car dealer had failed to disclose on the loan application that Jane had six children and was expecting her seventh child.

The finance company offered to take back the car and reimburse Jane for the payments they had made since the date of her complaint. It also assisted Jane with a trade-in for a bigger SUV to fit her growing family.  

Jane was not happy. She wanted to return the car and cancel the loan. She believed the finance company had breached its responsible lending obligations by approving Eric’s application, and she complained to FSCL.



We contacted the finance company who was eager to settle the matter with Jane. In our initial review, we identified some responsible lending issues that warranted further investigation. It seemed the finance company had not taken into account Jane’s six children in their affordability testing. We were also concerned about the lack of evidence of income and expenditure. We discussed this with the finance company, who agreed they had not factored in the dependants. If they were to assess the loan application, they would factor in the children and consider both the husband and wife’s income and expenses.



The finance company agreed to unwind the deal. It arranged for the dealer to buy the car back at the outstanding loan amount, and agreed to pay Jane the fees and interest she had paid to date. However, Jane would need to pay for any damage to the SUV and for the road user charges since the SUV’s purchase. 

Jane was happy with this outcome. The finance company agreed to pay for Jane’s outstanding road user charges and deducted this amount from the settlement amount. Jane received all the interest and fees she had paid to date, and her outstanding loan was wiped, and the complaint was settled.


Key insights for the participant and the complainant

Often relationship difficulties occur between the parties and the broker or car dealer. In this case, FSCL did not have jurisdiction to investigate any misrepresentations made by the car dealer as he was not a scheme participant. However, the law dictates that it is the lender’s responsibility to obtain sufficient evidence of an applicant’s income and liabilities to ensure they can afford the loan. The finance company acknowledged it could have done more to ascertain Jane and Eric’s full financial position. With our assistance, the parties worked together to unwind the loan.