Our client ‘Craig’ believed he had been sold an unaffordable Hire Purchase (HP) deal for his new vehicle, a Nissan Qashqai.
Craig’s finance agreement, which began in January 2020, was still active when he contacted Barings Law to see if he had a case for claiming compensation.
The Qashqai was valued at a little more than £15,000 and by the end of the five-year deal he would have paid a total of £24,762, as the interest rate was 15% and the APR was set at 28%.
Craig did have loan and credit card repayments in addition to the typical existing outgoings – such as rent and living expenses – at the time of entering into the HP agreement. He was not in arrears for his pre-existing debts and recalls being told he had passed a credit check by the dealer providing the finance.
However, the dealer failed to verify Craig’s income via bank statements or payslips, and he feels there was no attempt to understand his financial circumstances.
During the five-year term Craig missed two payments, or was late in making his monthly payment. He admits that, at times, he was forced to borrow from elsewhere in order to meet his monthly instalments.
As he believed he may have had a case for claiming compensation due to being granted unaffordable credit he spoke to our legal experts. We prepared his claim and contacted the lender on his behalf.
We argued that they failed to establish that the agreement was suitable for Craig, as they didn’t carry out effective creditworthiness assessments.
The lender’s failure to consider Craig’s affordability created an unfair relationship and, as a result, he experienced some financial hardship. Craig’s ability to make his repayments was not considered as the dealer didn’t verify his income and any savings he may have had. For those reasons the lender was liable for the loss and damages Craig suffered as a result of their irresponsible lending.
The lender upheld Craig’s complaint that they were irresponsible to accept Craig’s application for credit. They proposed a remedy whereby they waived the outstanding balance on the vehicle, which was £1,666.22. They also refunded interest payments of £7,331.93 towards the agreement and added 8% simple interest to account for the time he was without those funds. After a 20% income tax deduction on that interest, that amounted to a further £2,242.08.
As well as waiving the outstanding balance on the vehicle, the lender offered to make a payment of £9,574.01 to Craig. In addition to a compensation package totalling £11,240.23* the lender also removed any negative information relating to the agreement from Craig’s credit file.
*Amounts are before fees and disbursements
