Borrower $3600 behind after lender accidentally cancels payments

A borrower owed $3600 in unpaid loan payments after their lender accidentally cancelled the automatic repayments. The man and his wife were co-borrowers on a vehicle loan taken out in 2023. They set up the payments to be taken directly from their bank account each month. However, in late 2024, due to an administrative error, the direct debits were cancelled by the lender. The couple was unaware of the cancellation and by the time the lender noticed the problem, they were $3600 behind on their loan payments.

The lender apologized and offered to waive certain fees and interest charges, and set up a payment plan for the missed amounts. However, the borrower was not satisfied with this proposal, believing that in addition to the missed payments, the principal amounts that should have been repaid were also owed. Financial Services Complaints Ltd (FSCL) investigated the case and concluded that the borrower was required under the loan agreement to make the missed payments.

But FSCL also noted that it was fair for the lender to provide a resolution that would lessen the financial impact on the couple.

The lender agreed to reduce the interest rate from 12.95 percent to 9.95 percent on the loan. Additionally, the lender proposed to roll over the missed payments to the end of the loan term, which meant the borrower would face a longer repayment period rather than having to make higher monthly payments. This settlement would result in the borrower paying between $1500 and $2000 less in interest over the life of the loan.

FSCL emphasized the importance of borrowers regularly reviewing their bank statements to ensure payments are being made correctly, even when a lender makes an administrative mistake. If problems arise, borrowers were advised to discuss options that could reduce the long-term costs of their loan or the impact on their daily repayment schedule.

FSCL also suggested signing up for Money with Susan Edmunds, a weekly newsletter that covers various aspects affecting personal finance.