In October 2019, Hana contacted an adviser for help to get a loan to consolidate her existing debts. Hana said that the adviser had been advertising to help people obtain unsecured loans. The adviser made arrangements with a lender, and Hana signed a loan agreement for $16,500 with monthly repayments.
In early 2024, Hana fell into hardship and was unable to make her repayments to the lender. Hana said that she was shocked to find out that her loan was secured by her car. She was upset that the lender was going to repossess her car to cover the repayments. Hana was adamant that the adviser’s advertisement had been for an unsecured loan.
The adviser explained that Hana knew her loan was secured because she had used her car as assurance to negotiate a lower interest rate for her loan before she signed the loan agreement with the lender.
Hana was unhappy that her loan was secured, and she complained to FSCL.
Review
It was likely that Hana knew her loan was secured. We could see that:
- the adviser’s file note recorded that Hana was “happy to use her car as security”.
- Hana had successfully used her car to help negotiate a lower interest rate for her loan. This was recorded in an email chain between Hana and the adviser.
- Hana had signed the loan agreement in two separate places, and the agreement clearly said in bold font that the loan was a secured loan.
Resolution
We suggested that Hana discontinue her complaint and Hana agreed to do so.
Insights for borrowers It is important that you fully understand the terms of your loan before you sign your loan agreement. If your loan is secured, then the lender is entitled to rely on the security if you are unable to make your repayments.
