The Commerce Commission has filed criminal charges against El Cheapo Cars t/a Ezybid Finance for breaches of lending rules - in its third action in the car finance sector this year – alleging borrowers were not provided with key information about their loans.
The Commission said El Cheapo has entered guilty pleas and was co-operating with the proceedings.
"Our investigation into El Cheapo found that borrowers were not provided key information when changes were made to existing loans," its acting general manager of credit Sarah Bartlett said.
"Customers would often increase their loan amount with El Cheapo to cover other costs that had come up, like buying new tyres, and El Cheapo did not give its customers disclosure of the changed terms."
Bartlett said the disclosure should have included information on the repayment amounts, interest owed and loan period, which in most cases had increased.
The lender's actions were in breach of the Credit Contracts and Consumer Finance Act, the Commission said.
“Customers need to understand the terms of their contracts, and the effect of any changes they’re agreeing to. El Cheapo’s failure to provide information about the changed terms caused potential financial harm for borrowers, as they were unable to make informed decisions around the terms of the agreement and money they were borrowing,” Ms Bartlett says.
Read more here: ComCom takes El Cheapo cars to court
