Latest news with #ElCheapo
1News
7 days ago
- Automotive
- 1News
El Cheapo Cars fined, ordered to repay $340k for loan disclosure breaches
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. ADVERTISEMENT 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". ADVERTISEMENT "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."
Scoop
7 days ago
- Automotive
- Scoop
El Cheapo Cars Ordered To Compensate Hundreds Of Borrowers Following Criminal Charges
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.
