Finance Company Miscalculated Car Loan Payout Amount

[interwebs]

Hi all,

Hoping you are able to help me with my predicament.

These are the facts:

• I took out a car loan from Autoco* (One of the finance companies)for $10,000 on 01 June 2013.
• The period of the loan was 5 years.
• I sold the car in early January 2014.
• I phoned Autoco and requested the early payout figure.
• Autoco responded via email (signed document attached to email), stating that the payment of $9,000 was required to finalise my loan.
• I sold the car for $11,000, paying $9,000 directly to Autoco and keeping $2000 for myself.
• I spent the $2000 on a new camera.
• On the 24th of April 2014, Autoco sent me a letter stating that they miscalculated the payout figure and said that I still owe them $1000. Without this payment, they say they still have encumbrance on the vehicle.
• On their end, my account was accidentally credited twice (once at the beginning, and once at the end) for an insurance product that I cancelled within the cooling off period. Essentially, my account was mistakenly given $1000 credit.

Legally speaking, I'm not confident that I have a legal requirement to pay this sum back.

• Is there an implied term (based on common business practice), that the by requesting the final amount, and by paying it, the contract has been completed?
• Under consumer law, is this not 'misleading conduct'?
• If I disputed this, would they be claiming unfair enrichment? If so, could I not use the defence of 'change of position'?

Essentially, I had acted in good faith the complete the contract, and their error will leave me out of pocket. Even though the credited money was not mine, I was not aware of this and spent it in a way that is irrevocable, thus I would have to suffer a detriment to pay it back.

Any other tips?

Hope this is enough information and thanks in advance for your help!

* Not real company name.

 

[John R]

Hi interwebs,

1. Does the original loan contract set out a process for dispute resolution/resolving disputes? If yes, what does it require?
2. Is AutoCo a member of an external dispute resolution service, such as the Financial Ombudsman Service (FOS) or the Credit Ombudsman Service (COSL)?
3. When AutoCo sent the early payout letter, did they provide an itemised breakdown of the calculation (e.g. that reflected the alleged erroneous $1,000 credit for the cancelled car insurance product)?
4. Have you called or sent a letter/email to AutoCo as yet setting out the facts and your belief that their conduct, three months after the event, was misleading? If yes, how have they responded? (I assume that with the recent public holidays that you may not have received any response)

 

[interwebs]

Hi interwebs,

1. Does the original loan contract set out a process for dispute resolution/resolving disputes? If yes, what does it require?
2. Is AutoCo a member of an external dispute resolution service, such as the Financial Ombudsman Service (FOS) or the Credit Ombudsman Service (COSL)?
3. When AutoCo sent the early payout letter, did they provide an itemised breakdown of the calculation (e.g. that reflected the alleged erroneous $1,000 credit for the cancelled car insurance product)?
4. Have you called or sent a letter/email to AutoCo as yet setting out the facts and your belief that their conduct, three months after the event, was misleading? If yes, how have they responded? (I assume that with the recent public holidays that you may not have received any response)

Hi John,

Thanks for your response. Answers below:

1. Yes it does set out a process for dispute resolution. It says to contact internal Customer Relations and they will attempt to resolve within 45 days.
2. Yes they are a member of COSL. It states that disputes can be taken to COSL if a resolution is not agreed upon in the 45 day internal process.
3. They did provide an itemised breakdown. It showed the second credit, but did not show the original credit (already incorporated into the amount owing). It was as follows:
   - $10,000 owing (had already been credited $1,000).
   - $1,000 credit (erroneousness credit).
   - $9,000 final payout figure (amount paid by me to finalise loan upon sale of vehicle).
4. No I have not. I've called them to clarify some of the information that I've shared here today. I thought I would seek a bit of advice before moving forward as I want to know if my argument has any legal basis!

I guess I'm most confused about the power they have to reclaim it. Are they claiming this money as breach of contract or unjust enrichment or something else? I'm assuming this is important when it comes to constructing a defence or counter argument.

 

[John R]

Hi inter webs,
The only time that the I received "bank error in your favour - collect $1,000" was when playing Monopoly!

The right for AutoCo to maintain encumbrance over the car pending payment any funds owing is likely to be contained in the loan contract.
As a starting point, if you have reviewed the loan contract and are still unclear, you may consider asking AutoCo to clarify the parts of their letter and/or contract that you are unclear/uncertain about so that you can make a better informed decision and response for any consumer dispute resolution process. For example:

• Why did the early payout letter contain a miscalculation?
• Why has it taken [time period] for you to inform me about any miscalculation? (This may be important if AutoCo had subsequently communicated with you advising that no funds were owing under the loan following payment of the early payout amount)
• What part of the loan contract covers miscalculation or error by AutoCo?
• What part of the loan contract gives AutoCo the right to maintain on-going encumberance following receipt of payout amount for a car that has since (I assume) been sold in good faith with clear title to a third-party?

Please keep the LawAnswers community updated with your progress.

 

[interwebs]

Thanks again John. I will keep you and the forum posted!