Victims of model year mix-up cut losses
Marcella Scarlett, Business Reporter
Having tried and failed to amend his car papers, a victim of the model year mix-up has stopped payments on his auto loan.
Speaking with Sunday Business on condition that he not be identified, the car owner is indifferent to his bankers confiscating the car, saying they may have more luck rectifying his problem.
The car owner — now referred to by the pseudonym, John — stopped paying his loan during the summer, after attempting unsuccessfully to rectify the car papers to reflect the true age through his dealer and government agencies.
Banker Maureen Hayden-Cater says if a borrower defaults, the banks have no choice but to claim the asset and then dispose of it.
However, she said the default could end up being more costly, and that the better option is to sell the vehicle. Hayden-Cater spoke as president of First Global Bank, and not president of the Jamaica Banker's Association, saying she had not consulted with members on the issue.
Legal experts say the vehicle can be sold, but if the vendor fails to disclose the age discrepancy, the buyer could claim a breach of contract when the information is exposed.
John said he acquired what was billed as a 2008 Toyota brand in 2011, financed by a bank loan, but found out by chance that the car was actually three years older.
The car cost $1.4 million at purchase. He borrowed $1 million at 16.5 per cent interest to cover the cost, and was repaying the loan at a monthly rate of $25,000.
John's problems began when he tried to repair his car after an accident, and found that the prescribed parts did not fit. He eventually sourced parts from a supplier in Japan.
But: "When they came it was the same problem again," he said.
John was unaware that the model year was wrong until he came across a story in The Gleaner on the discrepancies.
The problem affects cars that were imported mainly from Singapore. On those vehicles, the assigned digit in the Vehicle Identification Number that establishes the model year is always a zero, leading dealers to use other means to determine the age of the cars.
"I had no idea this was happening. I didn't know anything about zero in chassis number; I just take everything on the papers as true," John said.
"I started to get curious because it (news report) list my car as one of the affected vehicles. So I go and check my chassis number and realise I might have a problem," he said.
licensing agency responsible
After confirming his fear through a valuator, John tried to have his papers dealt with by the dealer, but was told that the Trade Board, which is the licensing agency for car imports, was responsible for the situation.
The Trade Board and its legal advisors however had dismissed the dealers' efforts to lay blame on the agency.
John says he and other victims of the mix-up are now going around in circles.
"Every month, more than J$25,000 used to come out of my pay to pay for the car. My insurance due March next year, and by the looks of things, if I get coverage, then the insurance company is going to use the value of the older year — so I decide that I am going to cut my losses," he said.
Last month, one car owner told Sunday Business that he was denied insurance coverage until his car papers are adjusted, a procedure that the respective car importer is required, but has refused, to initiate.
That owner parked his car and he, too, said he is going to stop paying his loan.
Six insurance companies polled by Sunday Business have indicated that they would not offer coverage to affected vehicles.
John says he switched from salary deductions to over-the-counter payment of his loan, but now is "not paying a next dime".
"I am just going to try to save and see if I can buy a brand new car, even a Tata," he said. He acknowledges that the bank is blameless.
"Yes, I know it is not the bank's fault, but it is not my fault either. I am just cutting my losses. Right now, if the bank picks up the car, I won't be upset … they are the big boys and if this thing starts to affect them, then we might see results," he said.
"Banks are squealers and they carry heavyweight around here; maybe they can influence the speed to resolve this because right now is only we, the buyers, holding the blade."
Hayden-Cater reiterated, however, that it is in car owners' interest to dispose of the asset themselves."They cut their losses better if they sell the vehicle and pay out the bank because banks are not in the business of selling vehicles. The bank will incur fees to get rid
of these vehicles," said the bank president.
"By the time it is sold, you might end up owing the bank."
The path John has taken could end up hurting his future creditworthiness and ability to borrow at favourable rates.
Jamaica now has a credit bureau system, which captures the credit history of consumers. But John says he is not too concerned about his credit, as he intends to avoid incurring new loans but rely instead on his savings.
"They say cash is king. When you have cash, you don't have to think about credit scores," he said.