Lenders are required to do certain checks before lending money to ensure that a loan is affordable and appropriate for the consumer’s needs. When lenders don’t properly perform these checks, it’s the vulnerable members of our community, who are often in financial stress, who suffer the most.
Aleasha*, an Aboriginal woman, is a solo parent of four children. Aleasha relies on Centrelink payments for daily basics and essentials for herself and her children. Aleasha purchased a used car from a local car dealership with the assistance of a car loan. Over the course of two years the car had many problems that cost Aleasha over $3,000 to repair.
The weekly loan repayments were automatically deducted from her bank account and made it difficult for Aleasha to meet the essential costs for her family, causing her financial and emotional distress. Aleasha was advised by her financial counsellor to seek free legal assistance from the Cairns Community Legal Centre.
A Cairns Community Legal Centre solicitor reviewed the checks the lender made into Aleasha’s financial position before the loan was confirmed and discovered that there was no way Aleasha could have comfortably met the repayments without suffering financial hardship. On this basis, the Centre argued that she should not have been offered the car loan and successfully negotiated a loan reduction as well as a reduction in the weekly loan repayment amounts.
As a result of the Centre’s intervention, Aleasha could afford to keep the car and repay the remaining amount of the loan in a way that is stress-free and affordable for her family.
*Name changed to protect identity