The car loan lender was offered $30,000, but sold the car themselves for $26,000. File photo. Photo: 123RF
A man who lost his job and had his car sold because he could not pay its loan - and whose partner left him because he could not provide for his family - has had the amount of money he owed the car lender reduced.
His case is the first that external disputes resolution service Financial Services Complaints Ltd has issued a case note for in 2025.
It said that the man and his wife had taken a loan to buy a car and he made the repayments without a problem for 18 months, until he lost his job.
He contacted the lender and said he could not afford the loan.
The payments were deferred for two months while he looked for work.
After that time, he said he could not repay the loan and wanted to sell the vehicle.
He went to a dealer who agreed to pay $30,000 for it. But he still owed $43,000 and the lender said $30,000 was not enough.
He surrendered the car to the lender. It sold it for $26,000 which left him with $17,000 to pay.
He stopped paying the loan and the lender recorded the debt in default with a credit agency.
The man argued it was not fair because the lender could have accepted the offer of $30,000 and he would have only owed about $13,000.
He also wanted the lender to remove his wife as a co-borrower. He said she had limited English and did not understand what she had signed.
The lender agreed it should have looked at the $30,000 offer more thoroughly and agreed to reduce his debt, but it did not agree to release his wife as a co-borrower. She had lived in New Zealand for 20 years and worked in a customer service role.
It said it was not convinced she did not understand.
The man complained to FSCL, and said his wife had left him when he lost his job because he could not provide for his family.
He said she had tried to refinance her home loan, but the car loan default had caused a problem.
He said if the lender would remove her, he would pay the $13,000 at $100 a week.
FSCL said the lender agreed to remove the default listing in the interests of resolving the complaint.
FSCL said if he did not pay the loan back, the lender had indicated his wife's default listing would return.
It said the situation was able to be resolved without FSCL needing to issue a formal decision.
When a car is repossessed and sold, the sale must be commercially reasonable and done by auction, public tender or private sale.
If the item is sold for less than the amount owed, the lender cannot add further interest or fees.
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