El Cheapo Cars fined, ordered to repay $340k for loan disclosure breaches

1News

28-05-2025

A Wellington-based car dealer and financier has been ordered to pay more than $340,000 in compensation to hundreds of borrowers after it breached lending rules.
El Cheapo Cars was also fined $115,000 after pleading guilty to seven charges brought by the Commerce Commission under the Credit Contracts and Consumer Finance Act (CCCFA).
An investigation by the Commission found last year that borrowers were not provided key information when changes were made to existing loans between 2015 and 2021.
"Customers would often increase their loan amount with El Cheapo to cover other costs that had come up, like buying new tyres, and El Cheapo did not give its customers disclosure of the changed terms," said acting general manager of credit Sarah Bartlett last year.
Disclosure should have included information on the repayment amounts, interest owed and loan period, which had increased in most cases.
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In his sentencing notes at the Porirua District Court today, Judge Noel Sainsbury said disclosure obligations, particularly those about consumer rights and obligations, were "among the most fundamental protections" under the CCCFA.
"The importance of lenders adhering to disclosure requirements is undeniable."
The protection of vulnerable consumer groups was a "core priority" for the Commerce Commission, said general manager for competition, fair trading and credit, Vanessa Horne.
"We are particularly focussed on motor vehicle lenders who are providing credit to vulnerable consumers."
Horne said for many Kiwis, the purchase of a car was one of the biggest financial commitments they would 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."
She said sentencing was a "win for consumers and borrowers affected by El Cheapo's failures".
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"This case should send a strong signal to motor vehicle financiers that non-compliance with disclosure obligations will not be tolerated."
Borrowers who had a loan with El Cheapo Cars which was varied between 2015 and 2021 may be eligible for compensation.
The Commission would be reaching out to affected parties shortly, it said.
"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."