Bank acted fairly over sale of repossessed car

Hardship and financial difficulty,
Hasan took out a bank loan to buy a car. The loan was secured against the car. He also took out mechanical break-down insurance. Four years later, the bank engaged an agent to repossess the car because he had fallen behind on loan repayments and had failed to clear the arrears within 15 days of being sent a warning notice. However, Hasan had sold the car without the bank’s knowledge and consent, and the agent repossessed the car from the buyer.
June 2020

The car was sold at auction, but after the proceeds were used to reduce Hasan’s loan, he still owed $8,000, which included its repossession and auction costs. The bank advised him of this fact. He said the debt was unfair because he bought the car for $12,000 and had already repaid nearly $10,000. He also said the bank should have repaired the vehicle under the mechanical break-down insurance before selling it to get a better price. He asked us to investigate.

Our investigation

We considered the bank had acted fairly. It had an obligation under the Credit Contracts and Consumer Finance Act 2003 to ensure that it took reasonable care to get the best price reasonably obtainable at the time of sale. We considered the bank had acted in accordance with this obligation.

Before the auction, the bank got an inspection report assessing the condition of the vehicle. The bank was under no obligation to carry out any repairs to the vehicle to obtain the best price reasonably possible, nor did it have an obligation to claim on Hasan’s insurance on his behalf (we noted that in any event,  the car had not suffered a mechanical break-down). The sale was arranged through a reputable and professional auction business, which had conducted online advertising beforehand. We told Hasan we would not be able to uphold his complaint.


Hasan withdrew his complaint.

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