A Wellington car dealer was found to breach lending rules. (File photo) Photo: 123RF
The Commerce Commission has filed criminal charges against a Wellington car dealer and financier for breaches of lending rules.
Seven charges were filed against El Cheapo Cars, trading as Ezybid Finance - alleging borrowers were not provided key information when changes were made to existing loans.
The breaches occurred between 2015 and 2021.
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.
The regulator sought a fine and compensation at the Wellington District Court for 478 borrowers who did not receive the loan variation disclosures.
It was the third action the Commerce Commission had taken in the car finance sector this year.