In October 2015, ‘George’ bought a Range Rover Sport in a Hire Purchase (HP) agreement. The cost of the vehicle, which he agreed to pay for over a five-year period, was £26,598.
George signed up to a deal with an APR rate, including interest, of 25.9%, and agreed to repay £715.37 per month.
The HP deal was structured in such a way that, at the end of the term, he paid a total of £43,790.83 for the vehicle, an overpayment of £17,192.83.
George did not recall any credit checks being carried out when he entered into the motor finance agreement. He declared his outgoings of mortgage and loan payments, neither of which he was in arrears with, and that he wasn’t subject to an individual voluntary arrangement or a County Court judgment.
George’s income and expenditure were verified via bank statements and payslips. He said, however, that his dealer or finance provider didn’t try to understand his financial circumstances at the point of sale.
He was not made aware of the arrears policy and interest rise that would be imposed in the event of any missing payments and said that he did struggle to meet the HP repayments on time. Even using his savings and occasionally borrowed money from friends and family, he missed three or four payments.
George believes that his HP agreement was unaffordable and greatly affected his mental health and quality of life.
“I couldn’t sleep worrying about the loan and also got depressed as I was worried how I will cope with other essential bills like gas and electricity because a big chunk of my salary was going to the car,” he said.
George contacted Barings Law to present a case for the mis-selling of a motor vehicle finance agreement, on grounds of unaffordable lending, insufficient creditworthiness and affordability checks not being carried out.
Our legal teams contacted George’s finance provider on his behalf and, by way of resolution, looked to negotiate:
• Repayment of the sums paid by the client.
• Repayment of any deposit paid.
• Repayment of the balance of interest paid, on the basis that George might not have proceeded with the deal had proper checks taken place.
• Payment of simple interest based on the loss of use of the money.
George’s finance provider agreed that the agreement was unfairly sold, and said: “We have made the decision to uphold your complaint.
“We have not been able to satisfy ourselves the lending that took place was suitable for you, we offer our sincere apologies for this.”
They apologised to George and made a compensation settlement of £22,145.53*.
*Amount is before fees and disbursements.
