In March 2019, the FCA has published Our work on motor finance – final findings. The FCA regulates the providers of car finance and their review began nearly two years before and has been long-awaited.
News reporting has seized on the FCA’s findings that commission structures give dealers an incentive to charge higher interest rates.
But here I am interested in the FCA’s findings on affordability where the report concluded:
Contents
What is meant by “affordable”?
You might think that making all your car finance payments on time shows it is “affordable”.
But the FCA and the Financial Ombudsman (FOS) have a different definition.
They say a loan is only affordable if you can make the repayments on time, without hardship and still meeting your other commitments.
That means you need to be able to pay all your other debts, your normal household bills and expenses as well as the new car loan payments.
So if you have made your car finance a top priority as you don’t want the car to be repossessed, you may have increasing credit card balances, you may have taken out loans and you may have got behind with bills. That means even though your car loan is up to date, it is not “affordable”.
Affordability checks before you take the loan
A lender has to check that you can afford the car finance. This may mean checking not just your credit record, but also your income and expenses as well.
These checks have to be “proportionate”. If you have got a great credit record and a good income and are only borrowing a small amount, the lender isn’t going to have to look in great detail to be confident you can afford it.
But with a poor credit record, or where the repayments will be a large proportion of your income, better checks are needed. The FCA rules don’t say exactly what has to be done, but a lender often can’t rely on what the customer says their income and expenses are. Other ways to check include:
- your credit record shows what you are paying to other debts each month;
- there are national average figures for some expenses, so your estimate that you spend £60 a month on food or nothing on clothes isn’t realistic;
- the lender could look at payslips or bank statements to be sure.
These checks are often inadequate
This BBC story ‘Car payments are ruining our lives’ has an example of where a 23 year old student with a part-time job was sold a 21k Audi on finance, with apparently no affordability checks at all.
But it’s probably more common that a quick and inadequate check was done.
A car finance expert makes a lot of excellent points in this article: The car industry need to be more honest when selling car finance says:
It’s time for the car industry to do better, even if it’s to save customers from themselves.
So what are your practical options if you current car finance is hard or impossible to pay?
Should you make an affordabilty complaint?
The car finance company may have done a good assessment of affordability. At the start, you were able to manage the loan repayments. Then something went – perhaps you had your hours cut, or you split up with your partner. Here it’s not the lender’s fault that the car finance is now unaffordable.
But you may think that the lender should have seen that the loan was too expensive if they had looked properly at your situation.
In this case, you can make an affordability complaint to the lender. You should ask for:
- a refund of the interest on the finance. If you are still repaying the loan, what happens is that the interest is removed from the balance, so you only repay what you borrowed;
- for the remaining balance to be repaid at an affordable rate; and
- for any negative marks to be removed from your credit record.
The affordability rules for car finance are the same as for other loans. So you can follow the approach and use the template letter for an affordability complaint in this article: How to ask for a refund from large, bad credit loans.
Few affordability complaints have been made about car finance, so there is no indication of what the success rate is likely to be for these complaints. You should expect the lender to reject it and have to send it to the Financial Ombudsman – the process is all described in the above link.
These complaints may take many months. You will have to keep up the loan repayments during this time, or your car may be repossessed. I suggest you take some debt advice – talk to National Debtline who can help you look at your options for getting through this period.
Two alternatives to making an affordability complaint
1. Terminate your contract and hand back the car
HP and PCP contracts give you the right to terminate them, hand back the car and not owe any more money if you have paid over half the total contract value. This is often called VTing a car – that stands for Voluntary Termination.
Read How to VT your car which explains how terminating an HP or PCP car finance contract works and what you need to do.
When terminating your contract will give you a good result, it may be quicker, more certain and save you more money than making an affordability complaint.
If you don’t need to keep the car, you should definitely consider terminating the contract;
If you need a car but after taking debt advice, you can’t see how you can manage the repayments you may have no better alternative than termination.
2. Apply to the court for a Time Order
National Debtline has a good factsheet on Time Orders. It says:
You may be able to use a time order to reschedule the payments on your agreement. A time order and an order to change the interest rate may be a good option if you have fallen behind with your payments. You may be able to stop the creditor repossessing your goods.
The factsheet mentions the Unfair Relationship test. If the lender did not make adequate affordability checks, that can be seen as resulting in an Unfair Relationship so you could include points about this in your application.
You can apply for a time order if you have been sent an arrears notice, a default notice or the lender has already started repossession proceedings. You can’t apply if you currently up to date with payments.
I am not suggesting that a Time Order is an easy option. You have to start a court case and you may well have to argue it before a district judge who has never seen an application for a Time Order before as they are unusual. If you lose, extra costs may be added to your debt.
One of the reasons the Financial Ombudsman was set up was to provide a more informal way of resolving complaints than going to court.
National Debtline suggests that you may want to take advice from a local advice agency if you want to go for a Time Order, for example a Law Centre or a Citizens Advice. The Legal Beagle forum also provides moral support for people with court cases.
Choosing between these options
It can be complicated to decide between making an affordability complaint, VTing the car and applying for a Time Order.
Sometimes one or more of the options can simply be ruled out:
- you can’t VT the car if you have been served with a Default Notice which has expired;
- you can’t apply for a Time Order if you are up to date with payments;
- if the finance was originally affordable but your circumstances have changed, an affordability complaint will not succeed;
- when you want to keep the car, VTing it is not a good option unless you have no other alternative.
The rest of your finances matter as well. Car finance payments are a priority debt, so setting up a debt management plan for your other debts may help.
Talk to National Debtline about your car finance and the rest of your situation. They will help you decide what to do.
Get interest refunded from large loans
Which debts are top priority?
How to end your car finance early
varun says
I raised a affordability complaint against them , and this is what they asked me to answer
am contacting you following a complaint you submitted to us recently.
Specifically, you claim at the point you made the application for this finance agreement; we did not carry out appropriate affordability checks, and you have since found the agreement is unaffordable.
Naturally, these allegations are extremely concerning to me.
In regards to this, I can see your agreement is currently active; and you have never missed a monthly payment.
Can you please confirm why you now believe the agreement to be unaffordable?
In addition, within the terms of the finance agreement presented to you at the point of sale; you were asked to provide a declaration to us, confirming that the agreements monthly payments were affordable.
Can you please confirm why you made such a declaration, if you claim the agreement was unaffordable?
Can you also confirm what your desired outcome of this complaint is?
I will be carrying out a comprehensive assessment of your complaint; but I require you to provide me with a clear understanding of your claims, by providing answers to the above questions.
i have answered the other two questions but not sure what to say for that point , at the time when i bought the car , i had couple of pay days loans and credit cards , i think they did not do enough checks , will they not investigate if i don’t answer their query
Sara (Debt Camel) says
I am asking you to describe to me what happened when you bought the car. Did they ask you a lot about your other debts and bills? Were you just given some papers to sign and said it was affordable without really thinking about it? Were you under a lot of stress at the time and possibly not thinking clearly? Did you think you would be able to manage it but you didn’t really understand how difficult it would be month after month?
They should investigate your complaint even if you don’t respond. They can’t rely on you saying the finance was affordable, they should have checked it was.
John says
I have made an unaffordability complaint to a car finance company”hire purchase” they reviewed it and have said they did nothing wrong, I had made a SARs request at the same time and they sent me some of the information, but not all. They sent me a copy of the contract unsigned by them.
I sent them a request for more information, they ignored it and I stopped paying. 5 months passed they have applied for repossession with the courts. I have requested all the info under discovery and they have now sent me everything including the phone calls and a suddenly signed contract.
In one of the phone calls, it shows that when they did the affordability check they didn’t even ask what my outgoings and expense were, or if I had any debts. They only asked what my income was. and with a £1500 monthly income and more or less £1300 outgoings, they offered me £12000 over 5 years. I only took out £4500 over 5 years, this was still unaffordable.
Would that they didn’t check my outgoings, or expenses at all make it an unaffordable loan?
Thanks for any advice
Sara (Debt Camel) says
Would that they didn’t check my outgoings, or expenses at all make it an unaffordable loan?
It’s a big help but to win the complaint it’s also necessary that Ifthe checks had been made, theY would have shown the loan WAS unaffordable.
You need debt advice urgently on the court case, you cannot just stop paying car finance while you have a complaint going through unless you are resigned to losing the car. I suggest you call National Debtline on 0808 808 4000 today.
Luucy says
Hi Sara
Might be clutching at straws here , but wanted your advice please.
I have been paying £155.00 a month since January 2018 through Special Motorist Finance for a car that cost £5250 , I have another 18 monthly payments of £155.00 to pay .
This was given to me over the phone, no bank statements requested , plus I was on a zero hour contract as a carer in the community so my income would change month to month. Would you think it worth it making an affordability complaint now to them ?
Thanks for taking the time to read this.
Sara (Debt Camel) says
Are you saying the loan was unaffordable? Making the payments has caused your difficulties, having to borrow more or get behind with bills?
Sara lou says
Hi has anyone had success with MotoNovo on a affordability claim. I’ve just had an email saying they are looking into my claim.
Sara lou
Bartek says
Have you had any luck ?
Paul says
Hi All
I’m needing some advice regarding car finance. I was sold a car on finance through welcome finance. I was self employed at the time with a poor credit rating but given the car with an inflated APR. As I needed it for work I felt I had to take it.
Down the line a few missed payments and Welcome racked up more interest charges for this coming to my door and taking part cash payments.
I wrote to them explaining my circumstances and needed to reduce my payments. I started reduced payments but couldnt keep on top.
I therefore asked them to take back car. They wouldnt take back car and sold the debt to Atkiv kapital/PRA group.
They claimed I still owed £4000 plus on the car with I disputed. I started paying £100 per month, then stopped and asked them to pick up car.
They also refused and continued to harrass me by phone and letter for 2 years.
I haven’t heard anything from them now for over 3 years, but I’ve still got the car. Its broke on driveway and I would like to get rid but I fear to contact PRA in case it all starts up again.
Any advice for any part of this would be much appreciated, thanks.
Paul
Sara (Debt Camel) says
I suggest you talk to National Debtline on 0808 808 4000 about three things:
1) was the loan “affordable” at the start? if it wasn’t, you may be able to complain to Welcome and get the interest removed from what you owe.
2) did Welcome treat you fairly when you said you wanted to return the car? You would have had the right to Voluntarily Terminate the contract if you had asked before they sent you a default notice. If you did ask before but not using those exact words, you may be able to claim they treated you unfairly by not allowing you to do this.
3) what to do about the non working car and who it belongs to.
Paul says
Thanks for that Sara,
I’ll talk to national debt line.
Regards,
Paul
Thomas bates says
Hello I wonder if anyone can help.
I returned the car due to not being able to keep up with payments but they still have landed me with £3k debt
Am I entitled to make a complaint to get this wiped and how do I do so?
Sara (Debt Camel) says
Did you voluntarily terminate the finance agreement?
Lis says
Hi I opted for a voluntary give back after my husbands job was affected by Covid 19 however because of recent change in the law and the furlough scheme we now think we are able to keep the car but the finance company are ignoring my emails and calls. I got one email saying that because I have entered the voluntary give back I can’t do anything. I asked if I could pay off the finance at one point and they ignored me. Where do I stand now please? Thanks
Sara (Debt Camel) says
So you told the car finance that you wanted to voluntarily terminate the contract? How long ago?
How long was there to go on the contract?
Lis says
Hi Sara 14 months into the finance… Never missed a payment. It is £310 a month over 5 years. They based it on my wages and I did have to provide wage slips and account statements. They’re saying I will have to £5k back to them as well as give them the car back.
Sara (Debt Camel) says
£5k sounds roughly right if this was a HP contract not a PCP contract.
If the car had been repossessed after you defaulted you would have owed about £14k less what they sold the car at auction for.
How soon after saying you wanted to VT the contract did you change your mind? Are you sure you would be able to afford to continue with it now?
Do you have the money to pay off the finance? If you do, why did you decide to terminate the finance and hand it back?
Lis says
We were up the wall tbh my husbands contract finished but then a week later he was told he could be furloughed until March. I sent the vol email on the Friday and asked about paying off outright the following day (my son was going to buy it). But as I say, they are not responding to me at all. Its over a week ago now and had no contact at all.
Sara (Debt Camel) says
what do you think the second hand value of the car is?
Can I ask if you have other problem debts as well – rent/mortgage, utilities, council tax, loans, credit cards, catalogues…
Ovi says
Hello Sarah,
I issued a VT letter to Moneyway. Back in November 2018 and they have ignored this letter. But due to financial circumstances at the time I just couldn’t afford the payments. Saying that they ignored my letter for VT and I ended with a debt from Moneway(Secure Bank Trust) of £1210 for not making my repayments. I tried contacting them numerous times but they just ignored me to the point where we got to February and they accepted my VT letter but was not able to pay the outstanding amount. Now I have a DEFAULT recorded on my profile and i honestly don’t know how to get around this. Any advice will be welcomed.
Thank you
Sara (Debt Camel) says
I suggest you talk to National Debtline on 0808 808 400 about your options.
AE says
Hi Sarah,
In August 2018, my car was repossessed as I had missed my court hearing to contest. The car was auctioned and eventually sold (for £1,300 – Car was worth £4K+ ). The car finance company deducted this from my outstanding debt which now stands at £5,400.
However, since the repossession of the car, they have been reporting my credit file as arrears (6+ months arrears). I have NO repossession or default on my credit file from the car finance company. Filed an affordability complaint to the Financial ombudsman, but they have a backlog of cases and have informed me that I should expect a reply hopefully sometime in January latest.
Is it not standard practice to default on a debt if you miss the payment for more than 3 months? What do you think the implications are? Should I arrange some sort of payment options with them to avoid CCJ and defaults and disregard my affordability application. Their adjudicator has rejected my complaint, hence pursuing with Ombudsman.
Sara (Debt Camel) says
“Their adjudicator has rejected my complaint”
do you mean the lender rejected your complaint? Or an adjudicator at the Ombudsman?
AE says
I beg your pardon. Yes, the lender rejected my unaffordable complaint. I have escalated it with the Obudsman back in April 2020. I have received an auto reply informing me that they are dealing with mammoth workload and will get back to me sometime Jan/February 2021.
Sara (Debt Camel) says
ok then yes the lender should have defaulted your credit record, but I don’t see any mileage in arguing about this at the moment.
It’s pretty hard for me to guess what the redress decision would be if you win the case so I am not going to try.
If they threaten court action, let FOS know and thet may get your case some sort of priority.
steve says
Hi AE
I have been waiting nearly 2 years for a decision regarding The car finance company. The adjudicator upheld my complaint in which they declined and went to ombudsman last April and i am still waiting so i don’t know how long you will wait for a proper decision as TCFC also never respond to FOS either. Good luck with your complaint
Alex says
I am also still waiting for a final decision from the Ombudsman.
Original complaint was submitted in April 2019 to the FOS. Adjudicator partially upheld my complaint in July 2019 but TCFC disagreed with their decision.
It was picked up by an Ombudsman in November 2019 and I am no further forward with a decision.
Really don’t know what is taking so long but if you have been waiting for an ombudsman decision since last April, I have much further to go.
Bill says
I’ve complained to Moneybarn for unnafordable lending. Having initially been rejected took complaint to FOS and before it has been fully investigated moneybarn have agreed to refund all interest charges and additional interest. I’ve paid a total of approx £6300 in interest over 5 year period. What would the 8% interest be. Is it 8% from last payment or from each instalment. Agreement wa paid April 2020.
Matt says
Hi Bill I am in the same position having taken Moneybarn to the Ombudsman in November last year although I haven’t had anything back from them yet. How long was your case with the ombudsman before you heard anything?
Bill says
Hi Matt
It has been with the obundsman for just over 5 months. It hadnt actually been investigated as such because when they were compiling the evidence to submit to the obundsman they accepted they hadn’t done sufficient checks and put the offer of refund to the obundsman. the investigator said if I didn’t accept they would do full investigation but I have accepted and they have told moneybarn to deal with me directly and get back in touch if not sorted in next 4-6 weeks.
Sara (Debt Camel) says
It’s from each payment. About £1500 at a very rough estimate
Gord says
Yes they know that is why it was prioritised but it’s been 8 months now and I was told in March they had received the business file was told 2 months ago that it should be picked up anytime then was told it was assigned an adjudicator then told this week that it’s still in queue so still waiting
Lauren says
Hello,
Moneybarn borrowed me just shy of £27,000. They asked for 2 months bank statement, 2 months payslips and my credit file when assessing my application.
My salary on both payslips is significantly more than my usual monthly salary but to being owed missing payments/starting employment after the payment cut off date. Also the majority of my monthly expenses are not highlighted on my bank statements (as i paid cash to avoid late payment fees) and not all of my creditors report on my credit file.
In order to keep up with the Moneybarn payments, i have to cease payments to the majority of my other creditors and fell into debt as a result. Moneybarn got the car back and now insist i owe them around £17,000.
I raised a unaffordability complaint with them which they rejected so i raised it with the ombudsman, who also rejected my complaint saying the checks Moneybarn did are adequate.
Any help/advice would be much appreciated.
Sara (Debt Camel) says
I think if Moneybarn looked at your payslips and they were misleadingly large, it was always going to be hard to win this.
I suggest you should talk to a debt adviser about your options for this very large Moneybarn debt and your other debts. Phone National Debtline on 0808 808 4000.
Mike says
Hi Lauren,
Not sure if youve made a compliant to the ombudsman, but it might be worthwhile. There is a section in the rules that the financial institutions follow that says the following
“CONC 5.3.7 R explains:
“A firm must not accept an application for credit under a regulated credit agreement where
the firm knows or ought reasonably to suspect that the customer has not been truthful in
completing the application in relation to information supplied by the customer relevant to the
creditworthiness assessment or the assessment required by CONC 5.2.2R (1).”
This also covers high wage slips that are unusual in your line of work. A finance company should be able to judge roughly what you would normally be paid, and if it much higher, they are supposed to question it and ask for proof over a longer period.
George says
Just to provide an update on a Car Finance claim with Moneyway as you don’t seem to get these very often!
I emailed in November, Moneyway still haven’t provided me with a final response over 9 weeks after the initial complaint was made. I emailed for an update and received this back –
‘We have all the information we need and have come to a preliminary decision to find in your favour; however, we now have to present this past Senior Management for approval. Unfortunately these kind of cases can take a while, thank you for your patience, I will update you once a final decision has been made.’
In what kind of world do you tell someone that a preliminary decision has been made. Would this signify that they are confident that nothing is going to change? or have they dropped a major dollop by letting me know this claim has been effectively found in my favour pending further review?
They know it’s a priority case because of the mental issues this particular claim has caused me so if they decide not to uphold in the end, do you think I have grounds to raise to FOS?
Thanks again :)
Sara (Debt Camel) says
Definitely go to FOS – and also tell FOS about your mental health problems.
George says
Hi Sara,
They responded and said that after a board review, they have agreed to uphold my complaint. Still waiting, nearly 2 weeks later for figures, despite chasing. I don’t know that we’ve heard of Secure Trust Bank/Moneyway having financial difficulties?
Are you able to help me work out some estimated redress? They are following the standard return of interest plus 8% interest.
I took out the agreement in May 2016. This was for £2,999, paid back at £121.04 over 35 months. All payments were on time and I settled on the 36th month with a payment of £131.04.
Thanks in advance,
George
Sara (Debt Camel) says
Well that is progress!
So you paid 4366 in total (ignoring the pennies) less the 3000 you borrowed is a refund of £1366.
Plus VERY roughly £650 in 8% interest.
George says
I was quite happy – you don’t hear of these complaints going through very often.
Surely I wouldn’t stand to receive £4,366 back? The value of the car was £2,999. I guess I would stand, based on that to receive £1,367 back as a minimum? Plus whatever the 8% interest equates to?
Thanks again for your ongoing help – I will make a donation once I get my redress!
Sara (Debt Camel) says
I see what I wrote wasnt clear so I have clarified it.
the value of the car isn’t relevant, but the amount you borrowed is what is deducted.
Gord says
I was told by the fos that my case is with a special team that only deal with moneybarn so what does that tell you the fos are still deciding whether or not they can look at my case they are asking moneybarn for more info as moneybarn objected to my case being looked at I’ve been waiting about a year now
steve says
I am in same position. Moneybarn are very slow to respond to anything. My case has been with FOS since August last year the investigator decided in my favor i got an email from FOS yesterday
Your complaint about Moneybarn No.1 Limited
I’m writing with an update of your complaint.
Moneybarn have been in contact. They have asked me to clarify a few points – which I have now done. And they have said they hope to be able to provide its response to my view on your complaints on receipt of this information.
I have asked if they could provide its response by 25 January 2021 at the latest. Once they have responded I will let you know what they’ve said.
Kind regards
xxxxxxxxxxx | investigator |
Financial Ombudsman Service | Exchange Tower, London, E14 9SR
Ive been waiting since October for that soi really don’t know how long it will take.
P.s Sara do you have an email i can send you the decision i got from FOS if you would like to see it.
Becky says
Hi, I am looking into making an affordability complaint to Audi Finance about the possible mis-selling of car finance to myself. In Jan 2017 I took out finance for a family car, I don’t recall them making me dig around for payslips etc and I’ve been paying £302 a month ever since. Plus running cost, ins etc, I pay over £500 a month to keep the car in the road. I was already in some other Credit card debt due to my husband being made redundant.
Fast forward a couple of years, my husband didn’t get promoted as fast as he planned and we were putting living expenses on credit cards, I always prioritised paying the car finance. Then we separated in Aug 2018 and I was left with all the credit card debt and the car loan. I couldn’t afford it on my own, so I had to enter an IVA to clear the credit card debt and allow me to keep the car.
I believe if I hadn’t been allowed to take on this finance, then I would have had more money to manage my other debts and perhaps avoid the IVA. How do I go about approaching Audi finance? The car balloon payment is due in April 2021, I cannot refinance due to my poor credit rating now and will have to hand the car back. I don’t know what they could offer me in way of compensation if they were found to have loaned irresponsibly.
Sara (Debt Camel) says
Did your IVA firm say what would happen when the car is handed back? Are they expecting you to increase your IVA payments?
It isn’t clear from what you said that the car was unaffordable right at the start. If it later became unaffordable, you will not win an affordability complaint because of that.
If you get any cash compensation from the car finance company it will be paid into your IVA, not to you. If the
Becky says
The IVA has just been completed (early, my parents loaned me the money). Payplan have always said I would be able to refinance the balloon payment, however due to COVID, the company who would offer to do that are not lending at the moment, so I have no options to refinance.
Now the IVA is completed, will I still have to pay any refund to the IVA?
I don’t believe it was affordable, based on my income and existing outgoings. I was trying to get myself out of a hole (and a bad marriage) at the time, the finance company should have told me it was unaffordable.
Sara (Debt Camel) says
“Now the IVA is completed, will I still have to pay any refund to the IVA?”
Possibly – some IVA firms don’t insist on this though, so you need to ask Payplan.
PF says
Hi Sara,
Just a quick update on my affordability complaint against Moneybarn No1. After receiving the FOS Investigator view in November 2020 upholding my complaint, Moneybarn failed to respond to the FOS Investigator and my complaint was escalated to an Ombudsman. The FOS Ombudsman has now looked at my complaint and issued a provisional decision agreeing with the Investigator and has given Moneybarn No1 four weeks to respond. After a long 17 months I am hoping I may be getting to the end of this complaint. Let’s see if Moneybarn respond now!
PF
PF says
Hi Sara,
So hopefully a final update on my affordability complaint with Moneybarn No1. Following the provisional decision by the Ombudsman upholding my complaint in agreement with the FOS Investigator, Moneybarn failed to respond to the Ombudsman by the required date so the decision has been made final by the Ombudsman, a decision I accepted happily.
Because I had completed the agreement term (with great hardship) all the interest and charges are to be refunded + 8% – together with around 19 missed payment markers removed from my credits files. By far this has been the longest complaint but definitely the most rewarding, knowing myself that the agreement was unaffordable but having to explain this to the FOS. This site has helped me understand so much over the past two years, so thank you Sara and all who have contributed.
Only a couple more complaints to finalise then 13 years of debt will be history.
PF
steve says
Congrats i am really please for you. Moneybarn is delaying the same for me too .
PF says
Cheers Steve,
Good luck & I hope you get yours sorted soon.
PF
Alex says
I have finally received a final decision from the FOS and my complaint has been upheld!
Quick background summary:
Purchased car from The Car Finance Company in 2016. Car repossessed after a few months as failure to pay for car due to numerous faults with car and could not afford to pay for 2 cars at a time. Heard nothing from The Car Finance Company until January 2019 when many letters arrived in bulk about arrears of almost £6000 and a default was registered.
Jan/Feb 2019 – Affordability complaint submitted to The Car Finance Company
Feb 2019 – The Car Finance Company rejected the complaint
March 2019 – After receiving SAR request and evidence (bank statements, historical credit reports etc), complaint submitted to FOS.
April 2019 – Complaint picked up by FOS Adjudicator
November 2019 – Complaint partially upheld by Adjudicator. Both parties disagree with decision – complaint submitted to Ombudsman for final decision
February 2021 – Final decision from FOS Ombudsman – complaint upheld.
No refund due, as only actually paid approximately £700 towards the agreement but all negative data to be wiped from my credit report.
It has been a long wait for this decision, but happy nevertheless.
Sara (Debt Camel) says
so do you still owe a balance?
Alex says
The Ombudsman said in the decision that because I had not paid anything towards the agreement, he thought it fair I pay £700 for fair use. So I have sent proof that I made an initial payment of £269 and also a payment to the debt company for £550 so this is currently being reviewed.
I am hoping that they will now say, I don’t need to pay anything more towards the agreement but will keep you updated.
steve says
Same for me but i am not happy with the decison. I paid over £2500 for car and they sold it at auction for £3000 car bought for £5500 so should be nothing to pay if interest was taken off. Ombudsman nothing like the adjudicator the car had serious faults which i paid for repairs, the car was deactivated for 5 months and ombudsman says i have to pay rental of £160 a month for length of time i had car which was 15 months but i complained agter 3 days about repairs. Took them over a year to send someone to check car. below is what ombudsman is thinking of doing
my provisional decision
For the reasons given above, I’m planning to uphold this complaint and direct
The Car Finance Company (2007) Ltd to:
Reduce Mrxxxxx outstanding liability with the current owner of the debt to £620.
Remove any adverse information it has recorded on his credit file.
I now invite both parties to submit any further comments or evidence by 8 March 2021.
Ive made a statment and have want him to look at it again hopefully may change decison as i feel i have lost even though a lot of the debt has been wiped out.
Alex says
Have you had an update on yours Steve?
After sending confirmation that I had paid over £700 towards the agreement, final decision is now
my findings
I’ve reconsidered all the available evidence and arguments to decide what’s fair and
reasonable in the circumstances of this complaint.
Mr **** has provided evidence to show he paid £**** to the new owner of the debt at the end
of 2019. This means he has paid a total of £**** towards the fair usage of the car.
As this is more than the £700 I said is fair and TCFC hasn’t raised any arguments or objections to
that figure, this means it would be fair and reasonable for TCFC to refund the overpayment
to Mr ****. Mr **** overpaid in December 2019 by £*** Therefore, TCFC should add 8%
simple interest per year on that overpayment from the date of payment to the date of
settlement.
my final decision
For the reasons given above, I uphold this complaint and direct The Car Finance Company
(2007) Ltd to:
Refund Mr **** £****, adding 8% simple interest per year from 19 December 2019
to the date of settlement.
Remove any adverse information it has recorded on his credit file.
steve says
HI.
Yes they upheld mine but still have to pay £620 in which i find unfair considering i paid over the cash price taking my payments and auction costs into consideration. TCFC sold my debt to arrow global 5 years ago and they gave me a ccj. They bought the debt for just over 5k so they aint happy either thats its now £620. I contacted them told them outcome sent proof of decision but havnt heard a thing from them.
steve says
The ombudsman decision was totally different to the adjudicator. I think if a complaint is upheld by bith the decison should be the same rergarding decisions as i didnt have to pay anything originally but now i do. They had to pay me compensation from adjudicator i lost all that and have money to pay. I find it totally unfair. At end of day its a lot better than over 5k so i will have to live with it.
Sara (Debt Camel) says
the CCJ should be removed – the legal term is set aside. Make sure this is done.
Thomas J says
Hello Sara,
I’m sorting out all my finances as I quit gambling over 6 months ago now. One of the big loans I have is from money barn for a car. It was 15k for the car and the interest is 50% totally 30k.
I pay approx £550 a month and at the time I would go 3 months before I lost money gambling and it would put me behind on payments.
Looking back I think it is very similar to amigo where they accepted a ton of applications not doing the correct checks.
I don’t think that the proportional checks were made and to be honest I was a bit desperate, when they say I could get the car of course I jumped at it not knowing what I could get into. May I ask:
1. Would I have a case against moneybarn for this?
2. Would it affect my current agreement and put me in a bad spot as it is still outstanding?
Thanks ahead
Sara (Debt Camel) says
To win an affordability complaint the lender has to have failed to make proper checks the loan was affordable AND proper checks would have shown that the monthly payments were unaffordable.
How far through the HP agreement are you? What do you think the car is worth now?
Thomas J says
Thank you Sara
It was May 2019 I started this I believe the car to be worth around 10,000 now.
Sara (Debt Camel) says
and there is 2 or 3 years to go? Did you have a large deposit?
Thomas J says
There is 4 years to go as it is such a high APR, it was based on a “if you have a low credit score we can still approve you” which is what made it attractive
I didn’t have a deposit, they paid straight to the car so that they could guarentee that was what the money was spent on
I’m going to request for SARs so I can see what data that they have and cross check the affordability checks that they have on paper and go from there. If there is not a lot of information I guess the next step would be make an affordability complaint?
Sara (Debt Camel) says
With 4 years to go, that car is going to be worth a lot less at the end of it.
Is the £550 affordable for you? Not just can you scrape through each month but are you likely to be able to get through the 4 years.
One real option is to get through to the half way point and then hand back the car to MB – see https://debtcamel.co.uk/vt-end-car-finance-early/.
Or you can make an affordability complaint. You could talk to National Debtline on 0808 808 4000 about the pros and cons of these two options,
Lou says
Hi Sara,
Please help.
Got a car from Moneybarn finance July 2019.Paid a deposit of £4,500 and a monthly repayment of £479 agreed. Car was £18,000 but had a high interest due to my credit score at the time. Everything was explained to me at the time I believe. Total loan with interest came to £32,000 over 5 years. Due to covid I have lost my contract and things have been really tight. I had the 6 months payment holiday and after that offered to pay £250 monthly to be reviewed monthly. After 2 months they said they couldn’t accept my reduced payments and I now had 3 options- VT, Full payment or Repo. I need the car to secure work. However I want this huge debt to go away. We buy any car valued it at 12k. Moneybarn want 16,700 to settle, or handbank and pay 7k, if they repossess , I ll have to pay 11k. Do I have a choice here please. I am having sleepless nights and don’t know what to do. I have to drop the kids at school as we don’t live close. I take up contract anywhere and usually need a car. I can afford £250 a month but they won’t take it. I am 3 months in arrears. Why can’t they let me sell the car and owe just £4000 .
Sara (Debt Camel) says
can I ask what the rest of your finances are like? Do you have other priority debts – rent arrears, council tax arrears, utility bills? Other loans or credit cards?
Lou says
Hi Sara,
Thank you so much for your response. I have tried my hardest to keep up with all my debts as I tried to improve my credit over the years. I am now on universal credit as I seek out contracts. In the past I have done well and paid all bills on time for 2 years. I am struggling with my water bill only at the moment but a payment plan is in place. All other bills are up to date.
Sara (Debt Camel) says
“Why can’t they let me sell the car and owe just £4000”
How would you then manage without a car?
Lou says
Hi Sarah,
My plan was to find one that would not cost more than 250 a month or at least have some money to rent one monthly (as I hope this will be over soon). Till I find a contract. I am really going to struggle with anything costing more than this as I am to the wire right now. Thank you Sara!
Sara (Debt Camel) says
The problem is if you could only get a horribly expensive Moneybarn finance before, you may well not be able to get any car finance at all if you are on UC and also have the debt to Moneybarn.
Unless there is anyone in your family that could help, this is really difficult.
As the article above says, there is the possible option of a Time Order, but that is unusual and you need help from a debt adviser for that. Another option is a debt adviser writing on your behalf to Moneybarn and saying they are being unreasonable as you may well get another contract soon and asking for a few more months.
I suggest you talk to your local Citizens Advice or see if there is a Law Centre near you (put your postcode in this page https://www.lawcentres.org.uk/i-am-looking-for-advice)
Carl says
I think it’s disgusting how companies are allowed to offer such unrealistic offers.
£479 a month over 5 years that’s Lots of money.
But you have to take some of the blame you came to them.
Why didn’t you just buy a car with your deposit?
Sara (Debt Camel) says
That isn’t really relevant though. A lot of people have made bad financial decisions that later they really regret. But that is no defence for a lender – the whole point of checks a lender should make about affordability is to provide a safeguard that consumers are not making poor decisions.
E T says
Can anyone help with this statement please.
Repossession: Your Rights
If you do not keep your side of the agreement but you have paid at least one third of the total amount payable under this agreement, that is XXXX.XX we may not take back the goods against your wishes unless we get a court order. (In Scotland we may need to get a court order at any time). If we do take the goods without your consent or a court order, you have the right to get back any money that you have paid under this agreement.
It is a contract with moneybarn.
I am over 2 years into an agreement paying over 25% Apr and have since lost my job.
Never missed a payment yet but have paid over half.
I’m seeing maybe a loophole that I could get all my repayments back if I decline permission to take the car?
It isn’t ethical I know but it’s a dog eat dog world.
Sara (Debt Camel) says
That isn’t going to work because Moneybarn will just apply for a court order.
If you cannot afford to make payments now, you may have two options
1) VT your car – as you have paid over half and have not defaulted, you can hand back the car and not owe any more. See https://debtcamel.co.uk/vt-end-car-finance-early/
2) if you have lost your job because of covid-19 and you have so far not had 6 months of covid-19 payment break you can ask for a three month break now and this will not affect your credit record. This has to be done before the end of March. If you expect to be able to get a new job soon, this could be a good option for you, but the arrears just accumulate, so the payments still have to be made at some point.
It can be complicated to decide between these options and there may be other ones, so I suggest you talk to National Debtline on 0808 808 4000.
E T says
Thanks for that quick reply Sara.
I’ve misread the court order part thought it included that also.
I think maybe the VT is the best option.
Does the payment break add more or would I still pay the same?
Sara (Debt Camel) says
The payment break doesn’t stop interest accruing. And my guess is that if you took a case to the ombudsman they would think it fair that you should pay for the extra 3-6 months you had use of the car…
But please talk to National Debtline. This is a big decision and you don’t want to get it wrong because of something you read on the internet.
Mr x says
Hey, I got a car in finance from car giant, financed by money barn. When I took this car out I was 70% into my overdraft 70% into my credit card.
I had just graduated from uni, I worked full time and had various bills to pay rent water etc.
This has become unaffordable, even though I’ve not missed a payment yet, it’s keeping me from paying of my credit cards, & bills.
Is there any chance I can get them to refund me the interest rate and just pay what I borrowed.
I feel they shouldn’t have give me this loan I was in no position to hold such a finance agreement.
The car was 12K I paid £2600 deposit and my monthly repayments are £338 (4 years) a month. It’s just not sustainable. With an apr of 31%. It’s just become so hard, it’s effects my credit and mental health.
What can I do? I’ve had the car just over a year.
Sara (Debt Camel) says
You may have a good case for an affordability complaint. But these complaints can take a while to go through because many of them have to go to the Finacial Ombudsman – are you able to keep paying £338 a month?
I suggest you talk to National Debtline on 0808 808 4000 about your current finances and your options.
PS please don’t leave comments using different names.
Mr x says
I can make the payments each month but I can’t pay off my other debts and get out of my overdraft.
I’ve sent a complaint .. how long am I looking at waiting
Doug says
Hello ! I submitted an affordability complaint for a car loan in August 2019 – how long should it take to get a decision from the FOS ?
Sara (Debt Camel) says
has an adjudicator been assigned yet? Have you asked FOS why the delay?
Doug says
Thank you for responding so quickly Sara…. An adjudicator was first assigned last April. There have been two more since then; the current adjudicator was assigned in October 2020 and emails every 2-3 weeks saying the case is being worked on and hopes to have a result soon. But it just keeps dragging on !
Sara (Debt Camel) says
Then phone FOS up and say you want to make a complaint about the number of times the adjudicator has changed and the time this is taking with the current adjudicator.
Doug says
Will do Sara ! As a matter of interest – do you have an idea of how long complaints usually take to be resolved ?
Sara (Debt Camel) says
Not really, but if there is something odd and complicated about your case, this should be explained to you!
Doug says
Sara – I emailed the adjudicator directly on Monday – no reply received as yet. I phoned on Tuesday – I was assured I would receive an email response within 48 hours – still nothing. It is so frustrating !
Doug says
Sara – had a reply at last from the adjudicator – wanting to call to go through an income expenditure with me. Why would they want to do that when they already have the bank statements ?
Sara (Debt Camel) says
I don’t know. Perhaps they want to check they have got it right? Ask about something that seems to be missing?
Alex says
I’m afraid to say you will probably be waiting quite a while longer.
We had an adjudicator assigned to our case in April 2019 and have only just had the final decision from the ombudsman in March 2021.
I tried to complain to the FOS but there was nothing they could do about the wait times.
Doug says
Thanks for the update Alex – I hope it was good news when you received the decision ?
I find it so frustrating – a couple of times I have been asked for further information and given 7. days to respond which made me think things were progressing.
Alex says
It was a good outcome. Here is what the ombudsman have decided
my findings
I’ve reconsidered all the available evidence and arguments to decide what’s fair and
reasonable in the circumstances of this complaint.
Mr **** has provided evidence to show he paid £**** to the new owner of the debt at the end
of 2019. This means he has paid a total of £**** towards the fair usage of the car.
As this is more than the £700 I said is fair and TCFC hasn’t raised any arguments or objections to
that figure, this means it would be fair and reasonable for TCFC to refund the overpayment
to Mr ****. Mr **** overpaid in December 2019 by £*** Therefore, TCFC should add 8%
simple interest per year on that overpayment from the date of payment to the date of
settlement.
my final decision
For the reasons given above, I uphold this complaint and direct The Car Finance Company
(2007) Ltd to:
Refund Mr **** £****, adding 8% simple interest per year from 19 December 2019
to the date of settlement.
Remove any adverse information it has recorded on his credit file.
Alex says
I hope you get your decision soon as you are only a couple of months behind me when you submitted your complaint to the FOS.
I still can’t believe its taken 2 years for a final decision.
PF says
Hi Sara,
Following this mornings news from the Provident Financial Group, how do you think this will affect my recently upheld Ombudsman decision against Moneybarn?
‘The Group plans to process all outstanding relevant claims, as well as new relevant claims received before the proposed Scheme is sanctioned, under the Scheme, rather than on an ordinary course of business basis.’
Does this mean I will get less and the redress will be delayed yet again?
Thanks,
PF
Sara (Debt Camel) says
So far as I know, no Moneybarn complaints are included in the Scheme. See https://debtcamel.co.uk/provident-satsuma-scheme/
Was your FOS decision from an adjudicator or an Ombudsman?
PF says
Thanks Sara,
That’s a shred of good news – though I feel for the people who have a claim in with Provident.
My decision was a final Ombudsman decision – though still no contact from Moneybarn following them receiving the decision last Monday!
PF
gordon says
i have a car from money barn uk and the car value was 15000 and the money barn price was 27000 do you think that this is not right as they did not do many checks on me and want to sell car but think that i am being ripped off by them so what can i do
Sara (Debt Camel) says
Have the payments been unaffordable for you pretty much from the start? So much you have Ended up deeper in debt elsewhere?
Paying that much for a car at such a dreadful rate of interest was probably a very poor decision – but you will only win a complaint if the loan was unaffordable.
Tom says
Dear Sara/All,
I am just preparing an affordability complaint to Moneybarn regarding car finance of approx £7.5k taken in June 2020 on the basis of large and numerous gambling transactions (now over the gambling problem, which is great) in the months prior to the loan showing this was unaffordable.
Please can I just confirm the answers to the following points:
1. Can I raise an affordability complaint with a car finance company on the basis of gambling transactions?
2. If I raise an affordability complaint, but continue making payments as usual, is there any circumstance that Moneybarn can take back the car? I want to ensure I have a very clear answer on this as I do not want this to happen whilst the complaint is ongoing.
3. If all of the above is ok to go ahead, which template should I use?
Any other pointers on this would be great.
Thanks,
Tom
Sara (Debt Camel) says
The complaint has to be that the finance repayments were unaffordable when the loan was given. Gambling by itself won’t mean you win a complaint, but if the gambling meant the repayments were unaffordable it can. what checks did Moneybarn make on your application?
Your car cannot be repossessed if you are still making the payments while the complaint is ongoing. It is not safe to stop making the payments. Are the repayments now affordable? These complaints can take a long while to go through.
The article above has a link to the template to use.
Have you had other high cost debt? Look at affordability complaints about that too!
Tom says
Hi Sara,
Thanks for your comments.
Yes, the gambling was the major issue in my finances, I also had 2 (satisfied) CCJ’s, several defaults and outstanding debts when I applied, so when I did make the application, it was indeed unaffordable. If I am honest, this was around the time of the final straw for me and it was soon after this that I decided to get help and have since improved myself dramatically. In terms of checks, I know I sent through a couple of docs, but I don’t believe it was anything rigorous, I’ll take my chances with a complaint though.
Thanks, yes, my payments are now more affordable (thanks to your website in the main) and I don’t plan on stopping, I just wanted to double check they can’t ‘go rogue’ so to speak.
Thanks for the link, must have missed that first time round!
Yes, I have, significant, but due to this page (I have commented on other posts previously), i am well on my way to getting back on my feet :)
Thanks,
Tom
Nes says
Hi, has anyone here deal with Advantage finance? What was your experience like and did they uphold your complaint.
I had a car on finance from 2014-17, when i was at my lowest point financially and i am considering complaining. I had multiple defaults, late payments and a CCJ at that point too.
The monthly fee took a significant chunk of my salary nearly 25%
steve says
I have heard from FOS today. Moneybarn did not want to goto ombudsman and have decided in my favour. The RAV4 i must return they keep monies paid and they take agreement off my credit file as if never existed. I am happy with that.
The toyota aygo i have actually paid the cash price of £6500 already so they have said that i can keep the car and they will take agreement off credit file as if never existed any monies paid over car cash price will be refunded with 8% interest.
I am really happy with the outcome and i am pleased that moneybarn has seen common sense without esculating to ombudsman. When the agreements are taken off my file i will have lost over £31.000 of remaining debt. That makes me so happy and i feel its a big epidode over with.
christian says
Hi, I complained about unaffordable lending to FOS in July 2020 but still havent been assigned a case handler, does anyone have any experiance of how long this is now taking…
I had car finance with Moneybarn, the loan was for £4095 and I had to pay back £7953, it was my mistake taking out this finance as I was already in lots of debt and gambling with what little cash I had left, but this was never affordable to me and if they did their checks properly I should have never been given the loan, in my 3 month bank statement I sent them there wer 14 missed d/d / standing orders (including rent and bills), and 49 gambling transactions totalling over £1200. in my credit report I had 2 and a half years of continuous missed payments leading up to the loan, several defaults and a CCJ, showing that I was struggling to keep up with payments.
I missed my first payment with them after 3 months and ended up with 25 missed or late payments, 24 arrears notices, 11 default notices and 7 payment plans set up, Moneybarn rejected my complaint saying they werent aware of these factors (which surely sugests they didnt do their checks), so as I said I am now waiting on the FOS to look into it……………..
PF says
Hi Christian,
I have put my experiences and timeline in some earlier posts but my original complaint went to Moneybarn in July 2019, rejected by them and escalated to FOS in Aug 2019. Picked up by an FOS Investigator in Jan 2020, lots of email exchanges clarifying my income and expenditure with the FOS Investigator. Delays while the FOS decided if they could bring complaints against Moneybarn. Finally received the Investigator view in Nov 2020 upholding my complaint, Moneybarn didn’t respond within the 4 weeks, so a further 2 weeks given for a response, given that they were busy – still no response.
Jan 2021 complaint escalated to Ombudsman for a final decision – Feb 2021 Ombudsman issued a provisional decision agreeing with the Investigator and upholding my complaint, Moneybarn given 4 weeks to respond – no response!
March 2021 Ombudsman issued a final decision upholding my complaint – so around 17 months start to finish! Not quick I’m afraid!
Hope this helps,
PF
Zee says
Hi Sara,
I took a loan out with moneybarn for a 10k car and ended up paying 18k. All paid in full in 2020.
I put in an affordability complaint which was rejected by moneybarn so I went to the FOS. It took fos 6 months to pick up my complaint and after 2 months of investigation my complaint was upheld and I am due all the intrest back plus 8% and any adverse details removed from my credit file.
FOS said if I don’t hear anything from moneybarn by 4 weeks to inform fos again..
My question is do I contact moneybarn or wait for them to contact me?
Please advice
Thanks
Zee
Sara (Debt Camel) says
I would wait a couple of weeks then contact MoneyBarn
Mohammad Kalim says
Thanks will do!