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Christchurch car finance company to repay customers

6 April 2016
Release no. 105

Christchurch car finance company to repay customers

The Commerce Commission has reached a settlement with motor vehicle lender, Dealer Finance Limited (Dealer Finance), to pay back or credit at least $440,000 to customers who were overcharged interest on their loans from 2005.

Dealer Finance is owned by a group of Christchurch car dealers. It provides finance to borrowers under consumer credit contracts so that they can buy motor vehicles.

The Commission’s investigation found that Dealer Finance breached the Credit Contracts and Consumer Finance Act 2003 (CCCFA) because it did not credit borrowers’ accelerated or lump sum payments to their loan as soon as practicable. As a consequence, customers were charged interest on an incorrect unpaid balance. Around 5,800 loans were affected.

Auckland Consumer Manager John Lyall said, “All lenders should be aware of their legal responsibilities when offering consumer credit contracts to borrowers. Calculating interest is part of the core business of lenders and we expect them to get it right.”

“However, in this instance Dealer Finance accepted it had breached the law and it has taken steps to fix the problem and has agreed to provide compensation to affected customers.”

Dealer Finance has already adjusted the current loans affected and it is working on contacting people who have paid off their loans and who were overcharged $200 or more. It has also agreed to refund other affected customers who contact them and provide necessary details.

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You may be eligible for a refund if you had a loan through Dealer Finance or one of the car dealers listed below between April 2005 and April 2015, and you made accelerated or lump sum payments. If you have a current loan with Dealer Finance your loan balance should have already been adjusted with any refunds.

If you think you might be entitled to a refund and haven’t been contacted by Dealer Finance you can email them at enquiries@dfl.co.nz.


ends

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