El Cheapo Cars, a Wellington-based motor vehicle trader and finance lender, has been sentenced by the Porirua District Court for failing to meet its disclosure obligations under the Credit Contracts and Consumer Finance Act (CCCFA). The company pleaded guilty to seven charges filed by the Commerce Commission, leading to a fine of $115,000 and an order to pay $341,931.46 in compensation to affected borrowers.

Vanessa Horne, General Manager for Competition, Fair Trading and Credit at the Commerce Commission, emphasized the importance of protecting vulnerable consumer groups, particularly in the context of motor vehicle finance. She stated that the CCCFA is designed to ensure consumers receive upfront information about their loans, which is crucial for making informed financial decisions.

The breaches occurred between 2015 and 2021, during which El Cheapo Cars failed to adequately inform borrowers about changes to their loans. Judge Sainsbury highlighted the significance of disclosure obligations as fundamental protections under the CCCFA, stressing that lenders must adhere to these requirements to maintain consumer trust and market integrity.

The Commerce Commission views this case as a victory for consumers, as it reinforces the need for transparency and accountability in lending practices. Affected borrowers who had loans with El Cheapo Cars during the specified period may be eligible for compensation, and the Commission plans to reach out to them soon. Additionally, the Commission has initiated civil proceedings against other lenders, Go Car Finance and Second Chance Finance, for similar breaches of the CCCFA.