A loan company has been ticked off and ordered to pay $500 in a case that asked if a woman had been helped enough to fully understand the contract she was signing.
Monday, September 19, 2022, 8:35 a.m.
by Eric Frykberg
Financial Services Complaints (FSCL), concluded that the matter fell under a section of the Consumer Credit Agreements and Finance Act (CCCFA).
The litigation concerned the financing of motor vehicles. But FSCL has urged all lenders to note its findings.
The question was whether a loan of $20,000 should be repaid at $155 per week or per fortnight.
The woman said she was told payments would be made fortnightly. The loan company and car dealership said she signed a contract to make the payments weekly. The woman agreed that she had signed the agreement but had no time to read it and was rushed out of the office by the car dealer who had other customers waiting for her.
In subsequent transactions, notes taken by the loan company clearly showed that the woman believed her payments would be made fortnightly. This is what contributed to devaluing the woman’s signed contract in the eyes of the arbitrator.
“We considered whether the lender had done enough to meet its obligations under S9C(3)b of the CCCFA,” the FSCL wrote.
This section requires lenders to “assist the borrower in making an informed decision…. and to be reasonably aware of all implications of entering into the agreement.
To ensure this happens, this section of the CCCFA requires lenders to avoid anything that is or could be confusing to borrowers.
There was a question mark about that in the woman’s case.
“While a signed loan agreement is proof that a borrower understands the terms of an agreement, it was not the only proof,” FSCL wrote.
“We were confident that when the woman signed the loan agreement, she believed she was accepting fortnightly payments of $155.”
FSCL then said the woman had the right to cancel the debt and return the car. But then a new dispute erupted over whether it had been done within the required time frame.
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