El Cheapo Cars Ordered To Compensate Hundreds Of Borrowers Following Criminal Charges

Scoop

28-05-2025

El Cheapo Cars has been sentenced in the Porirua District Court for its failure to provide key information to borrowers about their loans. The Wellington-based motor vehicle trader and finance lender had pleaded guilty to seven charges the Commission filed under the Credit Contracts and Consumer Finance Act (CCCFA). El Cheapo Cars has now been fined $115,000 and ordered to pay $341,931.46 in compensation to hundreds of affected borrowers.
Commerce Commission General Manager for Competition, Fair Trading and Credit, Vanessa Horne, says that protecting vulnerable consumer groups is a core priority for the Commission — making this case particularly important.
'One of the Commission's enforcement priorities is to take action where we consider motor vehicle finance lenders have not met their obligations under the CCCFA. We are particularly focussed on motor vehicle lenders who are providing credit to vulnerable consumers.
'For many Kiwis the purchase of a car is one of the biggest financial commitments they will make. The CCCFA is there to protect consumers when they borrow money or buy goods on credit, and under the CCCFA, consumers have a right to be provided upfront information about any changes to their loan,' says Ms Horne.
El Cheapo Cars breached its variation disclosure obligations under the CCCFA when providing personal and vehicle finance to borrowers between 2015 and 2021.
In his sentencing notes, Judge Sainsbury emphasised that 'Disclosure obligations are among the most fundamental protections under the CCCFA, particularly those related to ensuring consumers are aware of their rights and obligations under the consumer credit contract' and noted 'the importance of lenders adhering to disclosure requirements is undeniable'.
Ms Horne says, 'The Commission considers this to be a win for consumers and borrowers affected by El Cheapo's failures, who may be entitled to compensation,'
'This case should send a strong signal to motor vehicle financiers that non-compliance with disclosure obligations will not be tolerated.
'Transparency and accountability are fundamental to responsible lending and are key to building consumer trust and upholding market integrity,' says Ms Horne.
Borrowers who had a loan with El Cheapo Cars which was varied between 2015 and 2021 may be eligible for compensation. The Commission will be reaching out to affected parties shortly.
Background
The CCCFA protects consumers when they borrow money or buy goods on credit. It sets out the rules that must be followed by lenders when they provide loans.
The Commission opened its investigation into El Cheapo in October 2021, following a customer complaint.
The Commission has also filed civil proceedings against Go Car Finance and Second Chance Finance in the High Court, with allegations that both lenders also breached the CCCFA when providing car finance to borrowers.