Rachael wanted to buy a car from a person she knew. She applied for a loan from a finance company. Rachael met the finance company’s lending criteria, and the loan was approved. The car Rachael was buying secured the loan and Rachael agreed to repay the loan at $70 a week for 3 years.
The finance company asked Rachael for the account details the loan advance should be paid into and Rachael gave the finance company the seller’s bank account details. The finance company paid the money to the seller, but the seller refused to give Rachael the car and refused to return the money. It transpired that the seller had now sold the car to someone else.
When Rachael did not make the loan repayments the finance company contacted her and said they would be repossessing the car. Rachael was worried about repercussions from the person who now had the car and so offered her existing car as security for the loan.
The finance company agreed, releasing security on the original car and taking security over Rachael’s existing car. Rachael started repaying the loan.
After a couple of years Rachael decided that it was not fair that she was paying for a car she had never received, so stopped making the payments. The finance company said that if Rachael did not restart the payments, they would repossess her car. Rachael said this was not fair and complained to FSCL.
Rachael complained that the finance company should not have paid the money directly to the seller because this weakened her bargaining position. Rachael said that if the loan money had been paid to her, she could have made sure she had the car before paying the seller herself.
The finance company said they paid the money into the account number Rachael gave them. If Rachael wanted the money paid into her bank account, then she should have given them that number.
The finance company also said that they would have repossessed the car shortly after the loan was advanced but did not because Rachael asked them not to and offered her own car as security.
During our investigation, the finance company could see that Rachael had been ripped off by the seller and was struggling financially. The finance company assessed Rachael’s situation under their hardship criteria and agreed that if Rachael repaid the debt at $25 a week, they would not charge any more interest and fees and they would let her keep the car.
We explained to Rachael that we could not see that the finance company had done anything wrong and thought the finance company’s offer was a good outcome for Rachael.
Rachael did not respond to our view, and we closed our file. However, we understand that Rachael has since recommenced discussions with the finance company and has accepted the offer to repay the debt at $25 a week.
Insights for consumers
Sometimes something happens in life that is not fair. If that happens to you, let us know. Even if we can’t uphold your complaint, we might be able to help find a solution to improve your situation.
When buying a car from a private seller, make sure you have possession or ownership of the car before handing over the money for the car.