Chch car company to refund customers

  • 06/04/2016
Dealer Finance (Thomas Mead)
Dealer Finance (Thomas Mead)

Motor vehicle lender Dealer Finance Limited has to pay back 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 and provides finance to borrowers under consumer credit contracts so that they can buy motor vehicles.

A Commerce Commission investigation found 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 5800 loans were affected.

"All lenders should be aware of their legal responsibilities when offering consumer credit contracts to borrower," Auckland consumer manager John Lyall says.

"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's directors, management and staff have co-operated fully throughout the investigation by the Commission, Dealer Finance's newly appointed general manager Darren Musson says.

"The company has invested significantly in the necessary resources required to investigate and resolve the identified issues in order to bring the matter to a successful conclusion," he says.

"Dealer Finance has taken a proactive approach to contacting affected customers. Letters have been sent and public notices will be issued in local newspapers during April and May to ensure that the company does everything possible to locate and refund affected customers."

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.

Affected dealers:

Newshub.