In August 2019, ‘Martin’ entered into a 56-month motor finance agreement for a BMW 320i Luxury Turbo valued at £10,700.
The interest rate on the agreement was 38.3% for the full duration, equating to a monthly payment of £369.25, which resulted in a total payable amount of £21,157.25.
At the time of purchasing the vehicle on finance, Martin felt pressured into accepting the agreement, which was rushed through without any credit checks taking place to ensure they could keep up with payments. The high interest rate caused him no end of financial difficulties, and he was forced to borrow money from his friends and family once his savings had been wiped out.
Despite his desperate efforts, Martin missed several payments, which led to a negative mark on his credit file. This situation severely impacted his mental wellbeing, causing him anxiety and depression, and he admits that he ‘did not see a way out’.
Barings Law submitted an affordability complaint on Martin’s behalf and the finance provider responded, conceding that better affordability checks should have taken place.
“Upon investigating your complaint, we conducted a more detailed analysis of his affordability,” said the provider. “As a result, we agree that the lending decision made was not appropriate.”
As a result of negotiating with the provider, Barings Law secured a settlement of £9,147.08* which amounted to the total of interest paid over the duration of the agreement.
As a further gesture of goodwill after accepting that the agreement was unaffordable, the finance provider also agreed to remove any bad credit marks against Martin, clearing his credit file.
*Amount awarded is before legal fees and disbursements.
