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Loan term confusion 

In 2018, Richard took out a loan to purchase a Mazda vehicle. The total amount borrowed, around $14,000, included optional health and work waivers which Richard accepted. In 2019, Richard took out another loan to purchase another vehicle.

Richard made almost all of his repayments on time until 2020 when his income was affected by COVID-19 lockdowns and alert levels.

When Richard missed repayments, the lender agreed to payment arrangements so Richard could clear the arrears over time. On two occasions, the lender disabled one of the secured vehicles, until Richard contacted them to make payment arrangements.

On five occasions, the lender agreed to payment holidays (which are commonly called loan repayment deferrals). Three of the payment holidays were for difficulties Richard had because of COVID-19. The other two were over Christmas periods.

In early 2022, Richard complained because he thought the loan for the Mazda should have already been repaid in full. He did not understand why he still owed money on the loan.

The lender explained that the loan term had been extended because of the payment holidays. Richard did not accept the lender’s response and asked FSCL to review his loans.


Richard’s complaint was primarily about the Mazda loan. He did not understand why he still owed money on the loan. He was certain the car dealer said the loan term was three years. Richard was also certain the loan agreement said the term was three years, but he did not keep the copy he received.

Richard also said he did not agree to loan extensions when he accepted the payment holidays. He thought the payment holidays for COVID-19 were a form of government assistance, and that the Christmas payment holidays were a reward for his good payment history. 

Richard also complained that the lender had disabled his vehicle when he was driving, and he questioned whether the health and work waivers had been worth paying for. He did not get assistance when his family had COVID-19.

The lender said the original term for the Mazda loan was four years, and that they had told Richard the loan term would be extended if he accepted the payment holidays.

The lender denied that they had disabled a vehicle while Richard was driving it. They cannot disable a vehicle which is in motion, and their records showed that both times a vehicle was disabled, it was located at Richard’s home address.


We concluded that the original term for the Mazda loan was four years. The loan documentation clearly set out the final payment date, which was four years after the first payment. There was no evidence to support that the car dealer had given Richard wrong information about the loan term.

The loan term was extended each time Richard accepted a payment holiday. The lender gave us evidence that they told Richard each time that the loan term would be extended, and that he would have to pay more interest if he accepted the payment holiday.

There was no evidence that the lender had said, or suggested, the payment holidays were a form of government assistance or a reward for Richard’s good payment history. This was a misunderstanding on Richard’s part.

Under the loan agreements, the lender was allowed to disable Richard’s vehicle in certain circumstances, including when he missed a scheduled payment. We were satisfied, based on vehicle tracking records and the technical ability of the disabler, that the lender had not turned off a vehicle while Richard was driving it.

We concluded that Richard had benefited in late 2021 from the work waiver he paid for. The benefit he received, around $1,200 towards his loan, was more than he had paid for the waiver.

Richard had not benefited from the health waiver when his family had COVID-19 because this fell outside the terms of the waiver.


We decided that Richard should discontinue his complaint.

Insights for consumers

When a borrower is having trouble repaying their loan, one of the relief options the lender may suggest is a loan repayment deferral. The borrower’s loan repayments are deferred for a specified period. The term of the loan is extended, and the borrower will pay more interest over the life of the loan because interest still accumulates when the repayments are on hold.

Before agreeing to a loan repayment deferral, the borrower should carefully consider whether this is their preferred relief option. If there is more than one relief option available to the borrower, the lender should explain the options available and give the borrower information so they can make an informed decision about what type of relief they would like to accept.