Entering into a five-year vehicle finance arrangement in April 2018, ‘Richard’ took home a Renault Trafic van valued at £22,061.50.
The interest rate was set at 29.9% for the full duration, resulting in a total payable amount of £35,563.
At the time of taking out the agreement, Richard already had ongoing loan, credit and credit card repayments, as well as his normal living expenses. While his repayments were not in arrears, the outgoings should have raised concerns for the lender, who couldn’t be sure that Richard would be able to keep up with the car finance.
However, Richard couldn’t recall any credit checks being carried out; certainly, no evidence had been communicated to him if they had. The finance provider also failed to verify Richard’s income or expenditure as he was never asked to provide any payslips or bank statements.
After feeling pressured by the salesperson into taking on the debt, Richard faced large monthly repayments due to the 29.9% interest rate. After some time, he started to miss payments, a situation worsened by COVID-19 as Richard was self-employed and relied on having a regular income, something that was not possible due to the pandemic. In total, he recalled missing seven payments, and experienced high stress levels and constant worry about how he would make his instalments.
Richard contacted Barings Law and an affordability complaint was submitted on his behalf. “We have not been able to satisfy ourselves the lending that took place was suitable for you, we offer our sincere apologies for this,” read their response. As a result, Barings Law secured a settlement of £13,700.13*, with the financial liability cleared.
