Our client ‘Phoebe’ had a host of arrears with her debts, and had twice had bailiffs at her door in relation to those debts.
Yet she was still granted the finance for her new vehicle, a Vauxhall Insignia, when she visited her local dealership in 2016.
Phoebe’s debts included loan and credit card repayments, both of which she was in arrears with. She was also in arrears with her rent and council tax.
Her dealership didn’t ask for verification of her income or expenditure, and she doesn’t recall a credit check being carried out when she visited them. She doesn’t recall anyone trying to obtain an understanding of her circumstances. Instead, she felt pressured into signing the finance agreement.
That hire purchase agreement entered Phoebe – a call centre operative – into a deal to pay a total of £13,692 for the car, valued at £6,290, over four and a half years. Her interest rate and APR were both set at 53% and she was never told that she was buying the vehicle from the finance provider, rather than the dealer. With hindsight, she also felt misled as the salesperson she had put her trust in had informed her that signing up with them at that time was her only option, and that there was no possibility of her negotiating lower interest rates.
Keeping up with the agreement proved to be a real struggle as Phoebe missed numerous repayments, mainly due to her existing outgoings. She was forced to borrow from third parties such as friends and family, as well as using up what savings she had, to keep hold of the car.
She did manage to complete the repayment term, however, and the car has since been scrapped. But the worry, stress and uncertainty of trying to make a payment of £250 each month took its toll on Phoebe’s health as she suffered from depression.
She contacted Barings Law and spoke to our motor finance experts.
They prepared Phoebe’s claim and contacted the finance provider on her behalf to state her legal argument.
We stated that their failure to carry out creditworthiness assessments meant that the agreement was unsuitable for Phoebe’s needs and circumstances, and that it created an unfair relationship between the finance provider and the customer.
The lender upheld Phoebe’s complaint and proposed the following steps to redress the balance, and restore Phoebe to the financial position she would have been in had she not taken out the finance:
• Calculate the amount she had overpaid on the finance agreement by deducting the cash price of the Insignia from the total she had paid, an overpayment of £7,402.
• Apply 8% statutory interest, minus income tax, to that amount – a further £1,898.
This meant a balance of £9,301.54* was refunded to Phoebe in order to settle the case. The lender also had any negative information as a result of the agreement removed from her credit file.
*Amount is before fees and disbursements are applied
