The FCA has published its long-awaited review of car finance: Our work on motor finance – final findings. This work began back in April 2017.
News reporting has seized on the FCA’s findings that commission structures give dealers an incentive to charge higher interest rates. For example: Car buyers overcharged £1,000 by dealers for loans, says watchdog.
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, who regulates the firms that provide car finance, has a different definition.
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.
If you have money problems, you may have made your car finance a top priority as you don’t want the car to be repossessed. As a result, your credit card balances may be increasing, you may have taken out loans and you may have got behind with bills.
In this case, 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 too 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.
But if you are one of the people who is already in trouble with car finance repayments, that isn’t going to help you. So here I am looking at your practical options.
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 bu,t 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
Max says
Hi Sara.
A time ago I have a credit to buy a car. £3500 pound 36 x 130.14 = 4685.04. (November 2015 – november 2018)
I complain against them for unaffordability, and they offer to pay me back only the late fees plus interest which is 254.28. Plus delete the record.
Should I accept that?
Can I get more?
Thank you.
Sara (Debt Camel) says
The maximum you could get back would be £1185 (the interest) plus about £150 for extra interest plus the late fees which they are already offered to refund.
I don’t think we have yet seen a car finance affordability complaint go to the Ombudsman so there is no track record to go on here.
How unaffordable was the £130 a month payments? What would your credit record have shown at the time you got your car – were there recent defaults, missed payments, large amounts of payday loans?
Darren stone says
Hi. I’m after some advice regarding this.
I stupidly took a car out on finance with moneybarn, my credit was poor at the time so this was all that was accepted.
The car was worth around £8000 but the credit total was around £18000. I have paid around 27 months so far with a struggle on a 5 year payment plan. I don’t want to terminate and lose the car as I feel I have already paid so much into it.
Is there anything I can do? Or do I just need to continue to pay it all off.
Any advice would be hugely appreciated.
Sara (Debt Camel) says
This is HP or PCP? What do you think the car is worth at the moment? Is your credit now better? How much of a struggle are the repayments at the moment?
Darren stone says
It is HP. which is why I don’t want to cancel the whole thing. As I do not have the money to get a good reliable car outright.
I would say the car is now worth around £5500. My credit is now a lot better yes. And in terms of struggling I have had to put off my rent in order to pay the car finance this month. So I am literally on the edge of affordability at the moment.
Sara (Debt Camel) says
I think you should talk through your whole situation with National Debtline asap. Getting behind with the rent is huge big warning flag. Unless there was something very odd about this last month, if you are struggling that much you may not get to the end of this HP contract however much you want to.
A couple of other points:
1) you need to forget what you have already paid to this car and just decide what is best to do from here on. I know that’s easy for me to say and it’s harder when you have been struggling to make the payments, but making the right decision now depends on your current situation and what may happen in the future, not what has happened in the past.
2) it sounds as though you can VT it in 3 months time. If at that point you still have a good credit record, you may be able to get another car on HP at a cheaper rate?
3) do you have a case for saying moneybarn didn’t do proper affordability checks at the start? If you can show they should have known you would struggle, getting interest removed from the finance would be a huge help. But was the finance really unaffordable for you at the start?
Chris says
Darren,
Just a reality check for you but you don’t have any money in the car. Even though you have been paying it for a while, it is worth a lot less than is outstanding. Just think of it as renting it. Remember that you can VT a car when you have paid half the amount back including interest and DEPOSIT. If you call them they have to tell you your position regarding VTing or exactly how much you have paid so far. This might be sent by letter.
I’d also advise doing a soft credit check(many websites have this) which may give you the chance of starting afresh at a better rate and cheaper payments.
Richard Pearson says
Interesting one this. My son took out a finance deal with Volkswagen Finance. He was also sold a gap insurance and a lifeshine package which consisted of autoglym. After a year it became obvious he was struggling as he is a pizza delivery driver/shop worker. I had to take on the finance and I calculate we will end up paying about £1800 in interest over the 3 year term. The Lifeshine package which was about £250 and the gap insurance at £300 were added to the loan. I gave him the deposit. When the contract is over, there is another £4200 to find to keep the car. The cambelt needs changing which he could not afford the cost of that with the dealer is around £700. Is there a case here?
Sara (Debt Camel) says
The question is, should VF have known that the monthly repayments – including any extras bundled into the finance package – would be too expensive for him?
One thing you could do is send VF a SAR (see the first letter in https://debtcamel.co.uk/refunds-large-high-cost-loans/ which says what to ask for) and see what comes back. Also get hold of your son’s bank statements for the three months before the finance application and see what his actual expenses were.
That will give you more information about whether VF should have been able to see that the loan was unaffordable.
Chris says
Richard,
I have to ask the question but as his father, when you gave him the money for the deposit, did you go with your son to the dealer at any time or did you talk about the finance and what it would cost? Did the conversation about affording the car take place and could your son have bought a cheaper car?
The final payment of £4200 which you mentioned is optional, so your son can just hand the car back at the end of the agreement if he wants, as long as he has stuck to the agreed mileage. The fact that he had the paint protection as well means that the car will hopefully be in a good condition and there is a good chance of the car bring worth more than £4200 at the end, which means he could always sell it to the dealer and walk away with some money in his pocket.
I guess that if your son hadn’t taken out the PCP and just taken out a normal hire purchase agreement over the same term(length of time) it would have cost another £100-£160 a month so the PCP was the best option, other than your son buying a cheaper car?
Richard Pearson says
Hi Chris, thank you for your response. I originally took him there but did not get involved in any discussions with the salesman about what was tacked on. I note that the paintwork has damage on the bumper so am wondering if the lifeshine package will cover this. Apparently, it must have happened when he was parked. A conversation about affordability never took place with the salesman. He said the salesman just kept looking for things to add on and was quite persistent. The mileage is going to be about 5k over when the contract is up in July, so I there will be another £500 to pay if the car is returned. I have been making the payments on his behalf and paying the servicing costs/MOT. He is earning more now than he was at the time of the deal. Of the monthly payment of £129, over £50 a month is interest. It is hard to answer if he could have afforded a cheaper car, the deposit I paid was the maximum I was able to give him, it was money from my Mum’s estate. The car he decided on was one of the cheaprest available at the dealership and he picked Volkswagen as he needed something reliable to get him to work.
Chris says
Richard, thanks.
I’m looking at this from a dealership point of view but trying to be impartial. I’m sure a conversation would have taken place where the salesman would have asked about budget, it’s part of our qualification to make sure we don’t show a customer a car completely outside of their budget. That’s wasting both the salesman and customers time and we wouldn’t do that. To be fair £129 a month sounds quite low per month for a VW unless the deposit put down was a lot which would have kept the payments low.
The lifeshine is a resin polish designed to look after the cleaning condition of the car. To make it shinier without needing to polish. It would also protect it against bird droppings and tree sap for a longer period of time than without it. It’s not an insurance to cover damage. Some dealers sell Smart insurance for that purpose.
I suggest looking at the finance agreement again as the interest you say is being paid, £50 a month on a £79 a month loan is extremely high. VW PCP is branded as Solutions and they do have a limit to what the rate can be. Also. You mentioned paying for the services, but historically VWFS normally include a free number of services if you take out a Solutions agreement. Maybe worth looking at.
Chris says
Re the cambelt, you could always go to a specialist if the main dealer is too expensive. Bear in mind the cambelt is recommended to be changed, not essential, but if something was to go wrong with it the warranty would check that it had been done or not which could affect any warranty payment.
There has to be some responsibility from your son on agreeing the deal who probably thought he could afford it at the time. You say he is earning more now so hopefully he can take back responsibility from you.
Final point, if he sells the car to the dealer or part exchanges, he won’t be liable for the excess mileage, he’ll just get less than forecast as the mileage is over, but 5000 miles on a four or five year old car isn’t a huge price adjustment.
Sara (Debt Camel) says
“There has to be some responsibility from your son on agreeing the deal who probably thought he could afford it at the time.” The Financial Ombudsman takes the view that the bigger responsibility is on the part of the lender to make sure the finance is affordable… asking for a SAR will provide some evidence about what checks (if any) were made before the finance was agreed.
Richard Pearson says
Thanks Chris. I will look into the points you have raised. He brought me the finance agreement today. I think I gave him about 2k as a deposit about 2 and a half years ago. It became apparent about a year into the agreement that he could not afford it. His Mums boyfriend wants him to move out but he cant afford to rent so is a bit stuck at the moment. I will do a SAR and take it from there.
stephen patterson says
I currently have a complaint with FOS regarding the car finance company.I complained to the company regarding affordability and they looked at my complaint and came to a decision within 2 hours.
They told FOS they checked my credit file and bank statements and decided i could afford it but FOS asked me for a copy of my bank statements and over the 3 months statements sent to FOS i had gambled over £4000 to an online casino and was in arrears with a lot of debts including rent and utilities.
When i bought the car in the January it has many faults and i complained and complained it wasnt until the december the finance company sent a guy to look at my car and he found the faults i had mentioned but said they could of been done yesterday theres no way of knowing when they happened even though i had been complaining about them for nearly 12 months.
In the end the finance was too much for me to afford and they took the car off me i had paid nearly £3000 off the car and my current balance is over £5000 remaining.
After i lost my car the company i bought the car from Fowlers Finance was on bbc watchdog program laughing at people like myself buying car from them saying they buy at auction cheap and just sell them straight away.I am sure that is wrong but i will just have to wait for FOS to make a decision.
It is currently at the investigator stage and he says a decison should be made by end of this week.
Sara (Debt Camel) says
Have you sent FF a Subject Access request asking for a copy of all your personal information, including all credit checks they made on you? Something in there may help your case with FOS.
steve says
No i havn’t.All i know is i rang about an insignia and ended up with a citroen c4 piccasso i gave details over phone rang me back after 10mins said everything ok bring some id with you and can have car .that was it regarding checks.It been with FOS a while and in final stages sorry its not with investigator its with an adjudicator
Sara (Debt Camel) says
ok well read https://debtcamel.co.uk/refunds-large-high-cost-loans/ and send off a request for your personal information now. better late than never! if the adjudicator upholds your complaint, great. If it is turned down, you can ask for it to go to an Ombudsman (ignore the adjudicator saying that the ombudsman will reach the same decision – they always say that) and that will takes weeks or months, so you will have the copy of your personal data before then.
Also read a lot of the comments on that page – that will give you an idea of how to frame a good affordability complaint.
steve says
ok i will thanks Sara.
Actually one other thing i had a log book loan out at same time to loans to go for my other car my wife used and FOS upheld my complaint due to affordability and L2G had to give me money back and it was at exact time too with same bank statements so hopefully i may get a result will just have to wait and see
Alex says
Hello there
I took HP out though The Car Finance company in 2016 and at the time provided credit reports, wage slips and bank statements which at the time would have show the HP was unaffordable.
Because I had poor credit, the car was fitted with a black box which would disable the engine if payments were not made.
I continued to make the payments however, I had a lot of issues with the actual car and the black box. Even though I was making the payments, the black box continued to disable to engine. This device was refitted several times as there was issues with it.
In the end, because of all the issues with the car, I gave the car back voluntarily, without penalty or so I had thought.
Fast forward to last month and I received a batch of letters from the Car Finance Company with a default notice attached dated in 2017. All of these letters had been previously sent to a wrong address, which Car Finance Company apologised for in their cover letter.
I contacted them and they are saying that I owe over £5000 as the car was repossessed! I have put in a complaint to the company and put in a Subject Access Request and have said that if need be, I will take them down the unaffordable lending route if my complaint does not go in my favour.
This has made me feel so ill as I have recently paid off all of my debts and I just feel I have taken a massive step backwards.
I don’t even have the car and haven’t done since early 2017 :(
Sara (Debt Camel) says
That must have come as a big shock. It sounds as though you have taken some sensible steps. There isn’t much you can do now except wait until you get the SAR data and a response to your complaint. If your complaint is upheld, you also need to ask for your credit record to be cleared – it was not your fault you never had the letters earlier.
Karli says
I need some advice for my mum about a leasehire car she has signed for. From October 2017 she nursed her husband through cancer until he passed away in February 2018. This was a reallystressful and sad time for mother. Fast forward a few weeks and mum took her 2015 plate car for a service. She bought a new car. Well she thought she had. She thought she had bought a newer (2017) car on HP at 0% interest, and that annual services were included as part of the deal. Now a year later when the car is due for it’s first service she has dicovered that not only is she paying interest on the loan, services are NOT incuded and worse of all she does not even own the car as it a lease hire not a hire purchase. I know the garage do not care about her personal circumstances when she signed the paperwork, but my mum is not a stupid woman. She never buys anything unless it is 0% interest. She is 63 years old. She thought that by the time she retires she would own the car outright. This is not the case, as she will never own the car unless she takes out a loan and pays a huge final payment at the end of the lease. Alternatively, after she has paid at least 50% of the value of the car she can return it and cancel the agreement. Is there anything we can do? My mum is mortified that she has been so silly, and I’m really angry that she has been taken advantage of. Any advice or help would be appreciated. Many thanks
Sara (Debt Camel) says
The interest rate should have been clear on the paperwork she signed. What is it?
I think you will find it hard to argue that the garage misled her about this. She can presumably afford the monthly payments?
What happened to her old car – there should have been a large PX value if it was only two years old?
“Alternatively, after she has paid at least 50% of the value of the car she can return it and cancel the agreement.” so this is a PCP contract. a form of HP, not a lease.
steve says
I got a decision today regarding my complaint with FOS regarding The car Finance company.
They have upheld my complaint i currently have a default for over £5000 on my credit file and that has to be deleted.I am not allowed my payments back i paid for the car as i had use of it even though it had lots of problems and i spent many hundreds of pounds making it roadworthy.I complained to the Car finance company for a year regarding this beginning on the 3rd day after purchase and they did nothing i paid over £2000 in payments but i have lost those.They have to pay me £100 compensation for the problems and they have to take interest off and pay me any late payment charges and remaining interest with an extra 8%.I wont get much money back but i wasn’t bothered about that i wanted my credit file cleared of this finance and at least this will be done.
Alex says
Hi Steve
Could I ask you how long your complaint was with the FOS?
I have recently recieved my SAR request from the car finance company and they had falsely stated the amount of defaults on my credit report. They stated that I only had one default and one CCJ. However, I have been able to obtain my credit report for around the time I took the car out and I have 3 defaults and one CCJ but one of the defaults was from Blackhorse Car Finance for over £8,000 which was also still outstanding.
Also my ingoings and outgoings were wrong on the original agreement. It shows that my rent was £375 when I actually pay £700 a month and I have bank statements to confirm this.
Sara would you be able to advise on this?
steve says
I put my complaint in via email to CFC and it took them 2 hours to give me a final decision.When i took it o FOS its taken them 9 weeks to come to final decision.
I know what you mean about false things they did same for me my bank statements saved me and made them look like liars.Fight them if you have all the information to back you up i can’t see why FOS wouldn’t uphold your complaint
Alex says
Thanks Steve
I have only recently complained to them last week about unaffordable lending.
I also complained to them about them putting a default on my credit report as I was under the impression due to there being so many faults with the car, I gave it back voluntarily. They havent upheld this complaint though and said the car was repossessed.
I feel in such a mess with all of this.
steve says
Hi Alex
Dont worry they always reject complaints. FOS will help you. try not to worry you have all the evidence and FOs will see this and show them for what they are.
Sara (Debt Camel) says
Re the defaults can you tell which credit reference agency they used? There are three, you need to be sure the three defaults showed on the one they saw.
Your rent, did you complete an income & expenditure form?
Alex says
No I cant see which credit reference agency was used but I’m pretty sure it was Experian as I remember printing off my credit report for them.
I did complete an income and expenditure form which shows the rent at £375. They told me to put this down instead of the full amount even though my bank statements would show fhe £700 coming out. I did sign the income and expenditure form though because I was so desperate for a car to get back and forth to work. I think this will go against me.
Alex says
Thanks Steve
As expected, they have rejected the affordibility complaint after looking at it for a few hours.
I have just come off the phone to them and whilst on the phone, I asked why they told me to put my rent down at half what I was paying. He said, thats just how we do it if you are living with a partner, we half all the bills. I said that my partner was a student on a small bursary at the time she wouldnt have even been able to afford half of our rent. I also said that I was a sole applicant and that my partners income didnt even come into it. How can they get away with this?
I am in work today so will phone the FOS on my day off on Wednesday. I have bank statements and my credit report for that period so hoping this will be enough evidence.
Sara (Debt Camel) says
Have you asked them to supply a copy of all your personal information? If not, ask that now – say you want all your information including all credit checks they made and copies of all phone recordings. So you can show that recent call to FOS.
steve says
Hi Alex
That doesn’t surprise me i really can’t get my head round how they can look at everything in a couple of hours hence why they lost my complaint.
Fight them at the end of the day you have nothing to lose to see what FOS think and hopefully you will be fine.
Good luck
Alex says
Hi Sara
I already have a copy of all the information from the SAR and previous phonecall correspondence. I have just emailed them again now for a copy of the phonecall I had today with them.
They have also admitted in their final response that they did not sent me any letters due to an administrative error hence why I never knew that I had defaulted (see previous post for what happened).
Keeping fingers crossed but my evidence is stacking up against them.
Alex says
Thanks Steve. Will keep you updated. Managed to get home from work slightly earlier and the FOS were open until 8pm so have now registered my complaint.
Alex says
Sara
I have got the call recording from yesterday and was just listening back to it.
The advisor told me that it was standard practice to half the bill payments if I had a partner. When I questioned this and said that my wife was only earning a small bursary each month he still said it was standard practice.
I also said to him the only bank statements that they wanted were the ones showing the income, not the other account I transferred to for the bills/outgoings. He also said this was standard practice.
Do you think I have a strong case.
Sara (Debt Camel) says
I think that call recording helps your case. They did not conduct proper affordability checks and told you what to write on the expenditure form. The call backs that up as showing that this was standard practice, not some unusual error. Your argument should be that this loan involved a significant amount of money over a period of years and the finance company should not have assumed that you were only paying half of the bills without any evidence that this was the case. Whether the loan was affordable for you will depend on the details of your case.
Alex says
I obtained a copy of my credit report for around the time I took the car out and this is the information they would have been able to see
Defaults
02/10/12- Vodafone £2167
01/11/12 – Capquest £522
01/11/12 – Capquest £359
24/01/13 – Black Horse Hire Purchase £6636
31/01/13 – Lowell Credit Card £448
10/03/14 – Lowell Communications £382
08/12/14 – Default (Tesco Mobile) £185
21/08/15 – Instant Cash Loans £188
CCJ
25/11/15 – £382
Credit Cards
Capital One £185/£200
TOTAL DEBT £11,454
None of the defaults had been settled. Once the FOS get in touch, I will be forwarding all the evidence on to them.
Steve says
Well that can only help your case obviously they didn’t do proper checks
Alex says
Fingers crossed.
I had a letter from the car finance company saying that the FOS has already been in contact with them and asked them for my file.
I know you said your complaint took about 9 weeks in total, but how long was it from submitting your complaint to the FOS to a case handler getting in contact?
Alex
Steve says
From sub to complete total 9 weeks
Alex says
FOS Current wait time for my case is around 6 months. Submitted the complaint on the 8/4
steve says
I had 8 defaults and 3 ccjs which the guy at FOS was concerned about i dont know what credit reference agency they used for the so called credit check.I use noddle to download my credit file and it had everything on it.
I bought my car from fowlersfinance and i really don’t think they did many checks if any for me otherwise the would have found problems straight away.
Joseph says
Sara,
If I recently just got a car on finance but it’s unaffordable, if I make a complaint and win will I have to give the car back? It’s on a hire purchase agreement. I don’t want to give it back so debating if it’s worth complaining if I have to give it back. I’m about £400 into a £9000 total loan (£5000 loan £4000 interest)
Sara (Debt Camel) says
I haven’t seen many of these complaints go through so I don’t know what a standard “you have won your case – this is what the lender much do” decision looks like on car finance.
But realistically if you are struggling with the loan repayments already, how will you possibly be able to manage the rest?
steve says
If you make a complaint about unaffordable lending theres no way you can keep the car it is the property of the finance company.If you win your complaint you will more than likely just send car back and be debt free from them .
Sara (Debt Camel) says
Well… it’s possible that FOS will say you have to repay what you borrowed with no added interest… I think without seeing quite a few affordability complaints go through, we really don’t know what a typical uphold decision will look like.
There is also the possibility of applying for a Time Order if you win a FOS affordability case, see https://www.nationaldebtline.org/EW/factsheets/Pages/time-order-hp/hire-purchase-and-conditional-sale.aspx
Matt says
Probably way too late for me but Ford Credit run a credit check on me in 2006 for a £8500 Ford Focus. Apparently they could only give me finance for £6k so they reduced the car value to that and added extra interest on!
I was 22 at the time and this was my first financial credit agreement which I struggled with for 5 years.
So yes Ford did screw me BUT I had the car for 8 years and was brilliant until a tractor hit it :(
Sara (Debt Camel) says
Way too late! But at least the car was great.
Joseph says
Hi Sara,
If at the time of an approved car finance application I had a default and missed credit card payments do you think I have a chance at an affordability complaint? I’ve read online they ‘specialise’ in bad credit? Also I remember them going through my credit file with me and questioning the missed payments but I just put it down to switching jobs (which was a lie).
Sara (Debt Camel) says
To win an affordability complaint, the monthly payments have to be unaffordable. They went through your credit record and you said you were paying those cards, so they should have checked that you had enough income to pay all those commitments and the new finances and essential expenses.
Send them a complaint using the template letters at https://debtcamel.co.uk/refunds-large-high-cost-loans/.
Sophie Muchenje says
Hi
I took a loan for a car in 2009 and I really struggled to pay for it and at some point it got repossesed. i wonder if I am eligible to a reclaim.
Sara (Debt Camel) says
It is VERY unlikely you will get anywhere with a complaint about something so long ago.
P Race says
I took out a car loan with money barn in 2012 and bought a car from a main dealer. The value of the car was £7600. I didn’t have a large enough deposit, so they increased the car loan to £8500, and showed on the paperwork that I paid a £900 deposit so I would be approved for the finance. None of this was true, I only paid a £100 deposit to the garage, and the balance of the car was paid by money barn £7500. I have all the paperwork from money barn, the receipt for the car, and the deposit I paid. Do you think I could claim back the interest on the loan?
Sara (Debt Camel) says
I haven’t come across a complaint about this before but it sounds unfair and at Moneybarn’s high interest rates will have cost you a lot. I suggest you complain ASAP, expect MB to reject the complaint and send it to the Financial Ombudsman. This is ver 6 years old, so it may be hard but it’s worth trying.
P Race says
I’ll let you know how I get on, thanks for the advice.
Matt says
Hi Sara
I took out a car loan with moneybarn in May 2019 for £10,970 over 5 years at a rate of £349pm. The problem is I already had several defaults in the 12 months prior and I am currently paying £395 to Amigo (which is with th FOS). For my Amigo loan the adjudicator has sided with me I am just awaiting a settlement figure they said this was completely unaffordable yet Moneybarn have given me an extra £10k of debt (my rating is so bad I couldn’t even get a payday loan when applying to moneybarn).
Do you think I have a valid affordability complaint? I have only made 5 payments which total £1745 but would like the massive interest reduced to a more affordable payment. I cant lose the car as I need a reliable car for work do you think if I win they will wipe off the interest or take the car back? TIA
Sara (Debt Camel) says
It sounds as though you have a good affordability complaint.
I haven’t seen enough car finance complaints which are made very early on finish – there are quite a few in progress – to know how the redress will be handled. You can put in your complaint that you would like the interest removed and your monthly payment reduced so that over the current term of the loan you repay the amount you borrowed.
Will you be getting a refund from Amigo or just the loan wiped? If you get a refund, you could use that to buy a cheaper car…
Matt says
Thanks Sara
The refund from amigo should nearly wipe out the loan although there will be a couple more payments under my calculation. Unfortunately no lump some though.
In moneybarns t&cs it states if any terms are broken they will take back the car so would an affordability complaint where I am still paying count?
Sara (Debt Camel) says
They cannot repossess the car if you are continuing to make payments. They might not like you making an affordability complaint but they are not allowed to be vindictive!
Matt says
That’s good to know, I will send my complaint and see what they say and let you know
Mike says
I took a car loan out in February 2017 for 5 years. At the time I was in a debt Management plan and needed a car as I had just been offered a new job after redundancy but it didn’t come with a car. As the job was as an area manager covering a an extremely large area I had to have a car for the job and claim mileage back. The car was £7200 and the payments were £207 for 61 months giving a total to pay back of £12627. I am now approx half way through and can hand the car back to the finance company and walk away from the car. The question I am looking to be answered is if I terminate the car at the half way point, can I still chase the unaffordable finance complaint through the financial ombudsman? The grounds for my compliant are that I actually shouldnt have been loaned to as I was in a Debt Arrangement Scheme which was clearly visible on my credit file and the interest rate was unfairly high due to the poor state of my finances.
Sara (Debt Camel) says
yes you can still make an affordability complaint. But by VTing the car, you will have paid a lot less interest. Also the mileage you received will have helped you pay for it. i don’t know how the Financial Ombudsman would allow for all that.
Sophie says
Hi I took a HP on a vehicle through money barn I fell into arrears & now I am having to pay over £3000 interest can you help?
Sara (Debt Camel) says
Hi Sophie, have you read the article above? that looks at what your options are.
Richard says
I took out a 14000 car finance loan with moneybarn at 35% apr on a bmw, at the time I had a bad gambling problem and a string of payday loans, I missed a few payments and moneybarn repossessed the car, I saw this thread as I was putting together complaints for mid-sold payday loans, so I thought i’d make a claim against moneybarn for irresponsible lending, the claim was rejected by my adjudicator so I was gonna escalate it to the ombudsman, but just before I did moneybarn sent me a letter stating they were writing off my outstanding £8000.00 debt so thanks a lot, I’m not sure if moneybarn are still being investigated by the fca and that’s why the wrote off my debt because I was contacted by the fca but it’s definitely worth making a complaint to them about irresponsible lending/underwriting checks.
Sara (Debt Camel) says
oh! That does sound like a good result!
sharon says
Hello everyone.I just need some advice regarding car finance i have.
I currently have car finance with Moneybarn and i am currently on benefits.I have 2 cars on finance with them one for myself and a joint with partner.The cost of my aygo is currently standing at £11200 with a payment of £217 a month and also my joint currently stands at £22951 with a payment of £376 a month.
I am starting to struggle with these payments my first car they didn’t even ask for anything apart from my driving licence and then was accepted but did ask for proof of income with 2nd car for both of us.I currently receive approx £2000 a month but the car payments alone is nearly £600 as well as a lot of home credit,brighthouse,provident,perfect home,loans at home and morses my weekly costs is just under £300 a week and thats without normal living costs.
I feel maybe more checks should of been done.I was wondering if you think i have a case to maybe complain regarding this.I don’t want to lose my cars as i am paying and i am not in any arrears.
Any help would be appreciated
Sara (Debt Camel) says
Are you and your partner working? How long ago were these loans taken out and are they standard HP or are they PCP where you have to make a large payment at the end?
What is your partner’s financial situation – do they have other debts too?
Have you looked at affordability complaints about your other debts? For Brighthouse & PerfectHome see https://debtcamel.co.uk/brighthouse-refund-complain/. For Provident, Morses, Loans at Home see https://debtcamel.co.uk/refund-doorstep-loans/.
I’m not saying you can’t win an affordabilty complaint about your car finance, but it’s a good idea to kick off the possibly easier complaints as well.
sharon says
Hi i receive child tax credits and child benefits.my partner receives ESA(joint claim) and pip i also receive carers allowance.The Aygo was taken out 6 months ago and the 2nd loan was 2 months ago.The agreements are HP over a 5 year period.My partners finances are very similar to mine has loans and store credits as well as catalogues and credit card.
Sara (Debt Camel) says
Is there a reason why you need two cars? I don’t think those cars are affordable – you have to add in the insurance, petrol, servicing, car tax on top of the car finance costs. But an affordability complaint so early may mean you risk losing the car, because you have paid very little to it.
It sounds as though you two have a LOT of debt. Can I suggest you talk to StepChange about a debt management plan and then get on with affordabilty complaints?
Laura says
Hello,
I’ve won all three of my payday loan claims and am pleased to say I’ve had 5 figures redress and am almost debt free! Feel like a long time to get here. I bought a car in amongst all the month on month payday loans. I had 49 Wonga loans and 12 pounds to pockets loans in 4 years. although I never missed a payment(because I was getting payday loans galore) I had all the payday loans and three bank loans a multiple credit cards when I took the finance out. I was never asked to provide evidence of my income or my expenditure, just asked what my salary was and that was it. Given the FOS has ruled all the other debt was unaffordable is it worth querying this? I paid over £3000 interest on a £6000 car (rolls eyes)
Sara (Debt Camel) says
If you feel the monthly car finance payments we’re more than you could afford and they perhaps caused you tmore have to take some of the payday loans, then this sounds worth a go.
Laura says
Thanks as always Sara. I have found the paperwork. Who do I complain to?? the dealership who sold me the car and finance or the actual finance company. I found the vehicle order agreement which mentions finance, the monthly cost and duration but no where does it mention the total price payable. Seems odd. The cost was £245 a month 35 months and final payment £543.42 so yes over £3000 the finance was!
Sara (Debt Camel) says
You complain to the finance company. Ask the dealership if you don’t know who this is.
I am assuming you have repaid the finance. If you are still paying, read the section in the article above about your other options.
Laura says
Yes it’s all paid. Sent complaint today and got a reply saying I would hear within 5 days in writing. That will be a no then haha will update when I hear. Thanks
Laura says
Hello now heard from finance company saying they can legally only respond in writing but I’ve moved house and we have sold ours are in the process of moving so don’t have new documents etc with new addresss. Is that correct what they are saying? I’ve said email final response is fine but they say no?
Sara (Debt Camel) says
Gosh the excuses some lenders will think up. Are they saying they want confirmation of where you live?
Laura says
Yes. I don’t have active finance. It was only when they messaged saying final response maybe in writing I replied saying about address. Was not a issue to confirm identity before this!
Laura says
Hi Sara
Rec/d final response back from car finance company. Not upholding my complaint. I did SAR and the only infor they provided was contracts. No credit checks or
Anything. My car finance came off at the end of the month and I never had or very rarely had money to pay for this which is part of the reason I fell into a ridiculous payday loan cycle. Is it worth taking to FOS or just put it down to experience and move on
LAura says
My finance company still haven’t provided SAR data but have sent final response. It’s over a month and I’ve chased them twice. Can I just go to FOS now?
Mel says
Hi Sara,
I bought a car on credit through Moneyway in 2014 for £2995 on a hire purchase agreement. The interest was 34.99% apr totalling an interest payment of £1770 on top of the car value.
At that time I had several defaults and payday loans on open on my credit file. Would this be considered a mis selling issue?
Many thanks
Sara (Debt Camel) says
That would depend on whether you could afford the monthly repayments. There is no bar to charging a high rate of interest because someone has a poor credit rating, but a poor credit rating will often reflect the fact that someone doesn’t have much spare income to make the monthly payments…
Mel says
Thanks for the quick response.
I guess I was kind of all over the place at the time, some months I was ok and others I got by on payday loans. Wasn’t a time I look back on very happily. I was glad when the agreement finally ended as it made a welcome difference to my income.
C says
I have complained to the ombudsman regarding a secured car loan with Barclays (Clydesdale) and they have basically come back and said cannot see that anything was wrong. At the time of the loan, my husband who’s name the loan is in was not even working and had not been for years. He was in receipt of benefits so I truly believe that they should not have given him the loan originally which has since left to repossession of the vehicle.
There are lots of issues that I have with the ombudsman response (e.g. I’ve asked for proof of the value of what they’ve sold the car for so that we can check how much we supposedly still owe; amounts on the original loan agreement and what they say we now owe do not correspond)
Sara (Debt Camel) says
There is no reason why someone on benefits can#t get car finance, the question is whether the finace company made checks that he could afford the monthly repayments.
Is this FOS decision from an adjudicator or from an Ombudsman?
You should be able to get proof of what the car was sold for by sending the finance company a Subject Access Request asking for a copy of all your personal data.
C says
Decision is by investigator at FOS.
Payments were unaffordable as husband in receipt of ESA so approximately £420 per month and car payment alone was almost £600 per month.
Sara (Debt Camel) says
ok, then you can ask for the case to go to an Ombudsman.
Can I ask what the rest of his and your finances are like?
C says
Thanks. Other finances completely dire. In fact, I couldn’t even get the loan in my name (they did try but rejected)
Jay says
Everybody ripped off by dealers, brokers and lenders need to start getting complaints in.
The FCA is updating all the time.
This will be bigger than PPI.
Mellymel says
Hi Sara, bit confused.
Who would I send my complaint to; Carloan4u (broker who accepted me and set the rate) or Moneyway (the lender) ?
Thanks
Sara (Debt Camel) says
The lender.
sharon says
Hi I need some advise regarding car finance with moneybarn.
I am currently on benefits married with children my partner receives pip and we had a car that had a lot of problems so we decided to buy a car with Moneybarn in april.The cost of the car was £6500 and too date with no arrears the outstanding balance is £11,523.79 with a payment of £217 a month (as of now) and my partner decided he wanted a car couple months later and Moneybarn said that it was ok and gave him a loan for to buy a car and the outstanding balance £20,999.17 at a cost of £369 a month with arrears of £659.62 but we got a payment plan to pay £80 a month and have paid 1 payment.We are paying the cars but with other home collected loans and normal living expenses we are starting to majorly struggle we don’t want to lose our cars but would it be worth while putting in an affordability complaint.We don’t work i care for my partner and only receive benefits and he had a major heart attack 2 weeks ago and is awaiting more surgery i am very worried about the situation.
Any help and advice would be greatly appreciated
Sara (Debt Camel) says
That all sounds very stressful for you, with health problems on top of big debt problems.
Could you change your life so you can manage with only one car? Even if you win affordability complaints, you would still struggle to repay the amounts you borrowed with no interest.
If you have been borrowing from Provident or another home credit lender for a long while, send them an affordability complaint now (see https://debtcamel.co.uk/refund-doorstep-loans/ for a template letter for this) and also ask them to reduce your repayments to a very low level because they are unaffordable.
Are you buying or renting? Do you have a lot of other debt as well as these car and home credit loans?
Mark says
Hi,
I would like some advice regarding a car loan through ‘family finance’ taken out via ‘can can car finance’.
I took the agreement out August 2018 when they offered me to borrow £8000 over 48 months paying back £290 per month, I stupidly agreed at this ridiculously high rate.
At the time I was working as an agency worker at JLR, I was laid off with a weeks notice 2 months later and had to take a job which is much lower paid. I have struggled to keep up payments over the past year and I finally called them today to see what could be done and their response was simply ‘I don’t know, there’s not much we can do’ – Very helpful. The settlement figure is still £7200 and the car is only worth £5000 maximum.
There has been a few times where I have had to delay payments but I have mostly kept up to date with payments.
Would anyone be able to give me any advice going forward?
Thank you in advance,
Mark
Sara (Debt Camel) says
Was this loan actually affordable before you were laid off?
What are the rest of your finances like, do you have other high cost debt you are paying? Other problem debt you are not paying?
Can you manage without a car?
Mark says
On paper it was affordable but was a big chunk of my wages.
I was last year and I still am in quite a bit of debt with missing payments on my report. I was also gambling ALOT last year but have since given up completely.
I can’t cope without a car as I work quite a distance and can’t get public transport.