The man was refunded about $6,000
A borrower has received a refund for the entirety of his loan payments after the discovery that the vehicle dealership had claimed a boarder that did not exist on his application, as reported in an article by RNZ.
The borrower had initially found a Ford Ranger that he was looking to buy for the price of $50,000 by a dealership that was based in Auckland. The dealership delivered the vehicle to the top of the South Island and had arranged a loan with a lender while the forms were being completed by buyers online.
The man’s loan had an interest rate that was 13.95% and he had agreed to pay back about $270 per week. However, he struggled with keeping up with the payments, which led him to ask financial mentor Jane Gibbin for the assistance.
When Gibbin had asked the lender about the affordability and sustainability assessments that it used for the borrower’s loan, it was found that the application included an income of $200 a week from a boarder that had signed a declaration. However, the buyer said he had no idea about it.
“The signatures looked very dodgy. They were blurry and had been written over twice. My client had never heard of the person named on the form,” said Gibbin, admitting that her concern had led to her researching more information online.
Gibbin found that the boarder was in prison in a different part of the country and that the lender had attempted to contact that salesperson that handled the loan application but found out that he had already gone to India.
The lender ended up refunding all of the payments the borrower had made, which was a little over $6,000. The vehicle in question was also returned to the dealer and the man was able to buy a cheaper and smaller vehicle for himself.
“It shows the importance of requesting the affordability assessments and reviewing them with your client,” said Gibbin.
With lenders being obliged to ensure that loans will be affordable to borrowers, they also need to keep records that show that they have met their responsible lending obligations. They also need to have copies of records available to the Commerce Commission or borrowers for free if they are asked.
Should these responsibilities be breached, lenders may face penalties costing up to $600,000 for a company and $200,000 for an individual, with statutory damages equal to the cost of borrowing added to the number.
