Finance lenders are under increased scrutiny after claims of dodgy loans in Queensland.
Matthew Timms, 24, was interviewed by 7NEWS after a frustrating ordeal with finance company, Pepper Money, which specialises in ‘consumer lending and residential mortgages’, according to their website.
Timms purchased a four-wheel drive car for camping and off-road driving and was recommended the finance company for a loan arrangement by his car dealership.
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“I got it for a seven-year loan term,” he told 7NEWS reporter Jacquelin Robson, and that he had been meeting his weekly repayments.
“It’s already paid out three years earlier,” he said, and ended up with a credit in excess of four thousand dollars.
Timms claims the finance lender held on to the excess and continued to take repayments without releasing him from the loan.
This was allegedly despite the finance lender allowing early termination with fees as part of the contract.
“They’re saying I still have $5400 (left to pay)“ Timms said.
“It doesn’t add up, nothing is adding up, they’re changing their stories every time”.
After checking the numbers on his statement, Timms made a complaint to the Australian Financial Complaints Authority.
Pepper Money responded to the complaint and offered to “waive any remaining outstanding amount” after “taking into consideration the amounts already paid towards the loan”.
The financier also offered to close the loan as a “gesture of goodwill” with “no admission of any wrongdoing”.
“I don’t understand why they’re doing this,” Timms said.
“How many people have they done this to?”
A spokesperson from Pepper Money told 7NEWS they never refuse the customer early termination. Instead they said in this case the customer had incorrectly assumed that the current balance was the only amount owing.
Bree Smith from National practice leader at Commercial Disputes advised that some financial institutions can make it “difficult for consumers to get out of contracts”.
Australia’s Financial Complaints Authority received more than six-and-a-half thousand complaints about personal loans last financial year.
Personal loans are one of the top four issues raised with the Ombudsman.
Those taking out loans are advised by the Financial Complaints Authority to understand the terms of their contracts before they sign, to make sure they always check statements and complain to the authorities if they feel they are being duped.
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