KEY POINTS:
Car owners using loans to help buy a car are being told to check bank statements carefully after the Commerce Commmission discovered a finance company charging interest on repaid loans.
Primus Financial Services, trading as Ford Credit, has refunded $49,000 to 391 customers as a result of a warning from the Commerce Commission.
Ford Credit, which is a wholly owned subsidiary of Ford Motor Company, provides finance to customers through 35 Ford car dealerships across New Zealand.
When a customer repaid their loan early, Ford Credit charged them interest for the whole month in which the loan was repaid.
By law, customers should only have paid interest up to the day their loan was repaid. Interest cannot be charged once a loan is paid off in full.
"Finance companies can't charge a whole month's interest when a loan has been paid off part way through the month," says the Commerce Commission's Director of Fair Trading Deborah Battell.
"The rule is simple: the day the loan is paid off is the day you stop charging interest."
Ms Battell said that once the Commission began investigating, Ford Credit had moved quickly to change its practices and refund affected customers.
"It is not acceptable for finance companies to make these kinds of mistakes, especially those associated with large companies," said Ms Battell.
"Finance companies are in a position of trust and relatively small amounts of overcharging about $125 per customer - can be hard for borrowers to detect."
Ms Battell said the commission expects others in the industry to check that their systems are correct, but borrowers should also check the amounts they are charged when paying off their loans early and contact the Commission if they suspect any overcharging.
- NZ HERALD STAFF
