Used car troubles
In February 2011 Rangi bought a minivan financed by Rad Rides. The total cost of the loan was $12,443 being $10,995 for the purchase price and $1,448 in fees and establishment costs.
Rangi paid a $1000 deposit and started loan payments at $130 a week. In May 2011, the minivan started making knocking noises and Rangi asked Rad Rides to fix the vehicle. Rad Rides made the repairs at no cost to Rangi.
In March 2012, the minivan needed more mechanical repairs. Rangi contacted Rad Rides who again fixed the minivan but added $273.70 onto Rangi’s loan for the repairs.
Later in March 2012, the Ministry of Justice seized the minivan because of Rangi’s unpaid fines. The Ministry of Justice contacted Rad Rides saying it intended to sell the minivan and pay Rangi’s unpaid fines from the sale proceeds. Rangi did not want this to happen and agreed that Rad Rides could pay $1,720 towards his fines to prevent the minivan from being sold. Rangi signed an acknowledgment of debt with Rad Rides recording that the fines payment was to be added to the loan.
The minivan again needed mechanical repairs in July and August 2012. Rangi then fell behind in making payments toward his loan balance. Rad Rides sent Rangi a number of pre-possession warning notices and charged Rangi default interest on the amount of the loan that was in arrears.
Rangi made regular payments towards his loan, but less than the prescribed $130 amount, with his payments typically $90 per week. Rad Rides had fitted Rangi’s minivan with a disabling device as a means of security. When Rangi missed payment, Rad Rides disabled his vehicle until reasonable payment was made.
In November 2014, the loan was due to be paid off, Rangi asked Rad Rides for an account statement. Rangi was shocked to learn he was $1,005 in arrears and owed Rad Rides a total of $5,880.23. Rangi contacted FSCL.
The complaint
Rangi complained that Rad Rides:
- should not have charged him for car repairs because the Consumer Guarantees Act 1993 applied
- had not advised him the full extent of his loan balance, default charges and arrears
- had not made reasonable disclosure to him of its costs and fees under the loan,; and
- was using its disabling device illegally and unreasonably.
Outcome
We investigated the complaint and found:
- Rad Rides complied with its obligations under the Consumer Guarantees Act 1993 in carrying out repairs for defects that became apparent a reasonable time after sale of the minivan.
- Rad Rides advised Rangi of his loan balance and arrears accurately, however, Rad Rides could have explained how it calculated the arrears. Rad Rides should have explained to Rangi that when it paid his court fines the loan went into arrears and started to incur default interest.
- Rad Rides complied with its disclosure obligations in sending notices to Rangi and acted reasonably in getting him to sign the acknowledgments of debt. Rad Rides had taken reasonable steps to make Rangi aware of his financial position under the loan.
- Rad Rides’ actions concerning the disabling device were reasonable under the legislation. New legislation regulating how disabling devices could operate was coming into force later in the year and we reminded Rad Rides that it would need to comply with the new standards.
Rad Rides and Rangi agreed to a new payment arrangement for the outstanding balance of the loan and Rad Rides credited Rangi’s loan account $612.61 for the default interest charged when the loan was in arrears after Rad Rides’ paid Rangi’s Court fines.
Lesson
As a consumer you have the benefit of legislative protections such as the Consumer Guarantees Act 1993, Fair Trading Act 1986 and Credit Contracts and Consumer Finance Act 2003. These Acts cannot be contracted out of and place further obligations on your seller or creditor that must be complied with.
