El Cheapo Cars to pay customers $340k after failing to give key loan information
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Car dealer El Cheapo Cars will have to pay more than $340,000 to customers after pleading guilty to seven charges under the Credit Contracts and Consumer Finance Act (CCCFA).
The charges were filed by the Commerce Commission and related to El Cheapo Cars' failure to give borrowers key information about their loans.
It was also fined $115,000.
Commerce Commission general manager for competition, fair trading and credit, Vanessa Horne, said the commission was particularly interested in protecting vulnerable consumer groups.
"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."
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 said disclosure obligations were 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."
Horne said the decision was a win for consumers and borrowers, who could be entitled to compensation. El Cheapo will have to pay $341,931.46 to affected borrowers.
"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."
Borrowers who had a loan with El Cheapo Cars which was varied between 2015 and 2021 may be eligible for compensation.
The commission said it would contact affected people shortly.
The commission began its investigation into El Cheapo in October 2021, after a complaint.
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