Ruby bought a black Ferrari for around $420,000. She paid $125,000 in cash and borrowed the remainder from a finance company, using the Ferrari as security. Ruby was to pay the finance company around $9,500 per month for three years.
For the first nine months, Ruby made the payments on time. However, she then started to default on payments. On some occasions, Ruby gave reasons for the default, such as overlooking a payment due to being on holiday in Fiji, or being unable to make a payment due to her son being in hospital. On other occasions, Ruby made the payments, only to have them dishonoured by her bank. The finance company found it increasingly difficult to contact Ruby.
Eventually, the finance company took steps to repossess the Ferrari.
Dispute
Ruby did not want the finance company to sell her Ferrari. She said that the finance company did not tell her of her right to apply for financial hardship. Ruby also said that, after repossessing the Ferrari, the finance company relocated it from an agreed storage facility to a car auction site and charged her for the cost of this. Ruby said she did not agree to this, and she had intended to enter into a repayment plan with the finance company.
Ruby complained to FSCL.
Review
We reviewed the loan agreement between Ruby and the finance company, and other ‘disclosure’ documents that the finance company had provided to Ruby. We considered that overall the finance company had informed Ruby of its ‘hardship’ process (although it had missed one or two opportunities to remind Ruby about it). We also noted that Ruby had not made a hardship application and that it was now too late to do so.
We considered that, in repossessing the Ferrari and relocating it to a car auction site, the finance company followed its usual practice. There was no evidence that the finance company had agreed to do anything other than that.
The finance company had made reasonable attempts to settle with Ruby, however Ruby had missed eight payments and had not shown any ability to clear the arrears or make further payments.
Outcome
We issued our preliminary view that there was nothing to prevent the finance company from proceeding to sell the Ferrari. We suggested Ruby withdraw her complaint. We didn’t hear anything more from Ruby.
Key insights for consumers
If you can no longer afford loan payments, it is best to make contact with the lender at an early stage to try to make an arrangement that suits you both.
