Justin Crawley, from Picnic Point in Sydney, was pursued by debt collectors for a car that had been repossessed. (ABC News: Meredith Griffiths)
Like so many young people, Justin Crawley needed a car to get to work, so in 2010 he went to a dealership in Parramatta looking to buy a second-hand car.
He was 20 years old, had $6,000 to spend but was expecting he would need to borrow another $4,000 to get the vehicle he needed.
Justin was told he would not be able to get a loan to buy a second-hand car and that if he needed to borrow money, he would need to buy a brand-new car.
The car salesman said he would sort out the financing for him.
“I felt pretty excited, being that young I felt absolutely rapt,” he said.
“I had a brand-new car, family car, [which could] take me to work every day, get me home. I was very happy with it.”
Justin had signed up for a loan for $35,000 at 25.4 per cent interest with finance company Esanda, which at the time belonged to the banking giant ANZ.
He had given the car salesman documents showing that he only worked on a casual basis doing industrial vacuuming.
Nevertheless he managed the repayments of about $300 per week for more than a year.
But when the company he worked for went bust in 2011, he found himself without a job.
The mysteriously changing debt
Justin Crawley doesn’t want other young people to fall into the same car loan debt trap he did. (ABC News: Meredith Griffiths)
Justin immediately got in touch with Esanda.
“I actually had no phone at the time because everything went under so I rang them at a phone box and declared bankruptcy,” he said.
He knew that he would be blacklisted from borrowing money for seven years but felt he had no other choice.
Esanda repossessed the car and Justin thought that the matter was over.
“I heard nothing from them for five years, not a letter, not a phone call, not an email, nothing,” he said.
So he was shocked in 2016 to get a letter from debt collectors saying he owed Esanda $27,876.
More letters followed, but the amount of the debt kept changing from $16,048 to $33,748.
“I was feeling pressured, a lot of weight on my shoulders,” said Justin.
“It wasn’t good for me and my family because I was always angry around my family and all of that, I had a lot of anxiety, a lot of depression from it.
Banking royal commission to examine car loans
Rebekah Doran from Legal Aid NSW said Justin’s case was common.
“We have people coming through the doors of Legal Aid every day across the state seeking help with car loans they can’t afford,” she said.
Legal Aid lawyer Rebekah Doran says she sees young people all the time who have gotten into bad debt through car finance. (ABC News: Meredith Griffiths)
“For most people cars are essential to get around, to get to work, to get the kids to school and that means that people can often be vulnerable.”
Ms Doran said the law is very clear that car loan providers need to make sure someone can afford a loan without substantial hardship and that it meets their requirements.
“Our experience is that car loan providers are very poor at complying with their responsible lending obligations,” she said.
In January the Federal Court fined ANZ $5 million for Esanda breaching those responsible lending provisions in respect to 12 car loan applications.
The court found that ANZ should have doubted the reliability of payslips being provided with the 12 applications between 2013 and 2015.
Justin Crawley’s case shows other problems had emerged well before then.
Car finance is now the subject of the banking royal commission.
On Wednesday, Westpac was grilled on the topic and ANZ will also be required to take questions.
‘They’re trying to scam you’
Legal Aid NSW is calling on the car finance industry to do better.
Rebekah Doran said young people can be particularly vulnerable, and Justin Crawley certainly feels like Esanda took advantage of his youth.
“If I was older I would have had a bit more realisation but I was young and they knew that.”
He went to Legal Aid New South Wales for help and after 10 months they managed to get his debt cancelled.
“We were able to negotiate directly with ANZ and to show them that the loan was unjust because he was so young and the product wasn’t affordable for him and it didn’t meet his needs,” said Rebekah Doran.
In a written statement ANZ said: “While we can’t comment on individual customers, ANZ no longer provides finance through dealers and recently announced it was suspending all secured consumer asset finance while we conduct a review of the business”.
Justin, now 28, said that was a huge relief but he was worried that other young people could fall prey to car finance companies.
“No young person I know is going to say no to a brand-new car so they know how to get you, they know how to get you with that and I don’t like how they do that,” he said.
“For all the young kids, don’t go out there and just go bull out of the gate. If they offer you [a] brand-new car don’t take it because they’re more or less they’re trying to scam you.”
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