In order to take a 2012 Nissan Qashqai hatchback, valued at £8,690, our client ‘Zoe’ entered into a three-year motor finance agreement in September 2018.
The finance provider setting the interest rate at 31.2% meant that the interest charges alone meant Zoe paid nearly double the vehicle’s value. Had affordability checks been carried out, concerns would surely have been raised for the customer’s ability to repay.
However, this was not the case – and the finance provider failed their customer.
At the time of purchasing the vehicle, Zoe recalled that there was no communication from the lender regarding credit checks. As a result, the lender had no understanding or comprehension of her financial circumstances and they couldn’t be sure that she could manage the substantial payments.
Their failure to consider her circumstances, and the high interest rate, meant that Zoe missed payments and had to borrow money to keep up with the payments. The ramifications were that Zoe’s mental wellbeing and quality of life plummeted. With such a large payment to meet each month it proved a real struggle, causing worry about whether other household bills would get paid and whether she could put food on the table for her children. It reached a stage where Zoe had to take on additional work, which led to more physical strain to add to the mental stress caused by her position.
Barings Law’s affordability complaint, issued on behalf of Zoe, prompted a response from the finance provider, who said: “We have not been able to satisfy ourselves the lending that took place was suitable for you, we offer our sincere apologies for this.” As a result of negotiating with the lender, Barings Law secured a settlement of £4,700.26*, with no further financial liability to the lender. The settlement covered the full amount of interest Zoe had paid over the course of her agreement.
*Amount awarded to Zoe is before legal fees and disbursements.
