UDC Finance will refund borrowers after it was found to have charged unreasonable fees.
The finance company, which provided loans of typically $10,000 or more for the purchase of motor vehicles, reached a settlement deal with the Commerce Commission.
Between June 2015 and September 2016, UDC charged a $45 dishonour fee when a borrower failed to make a scheduled loan repayment. If the borrower remained in default seven days after the scheduled payment was missed, UDC then charged a late-payment fee. That late-payment fee varied between $45 and $73, from June 2015 to February 2021.
UDC did not oppose High Court declarations that it had contravened section 41 of the Credit Contracts and Consumer Finance Act by charging unreasonable dishonour fees and unreasonable late-payment fees.
In a statement on their website, UDC said: "On 22 March 2021, UDC Finance Limited entered into an agreement with the New Zealand Commerce Commission in relation to Dishonour Fees that it charged on loans entered into between 6 June 2015 and 4 September 2016, and in relation to Late Payment Fees that it charged to customers on loans entered into after 6 June 2015. As a result, some customers may be owed a refund for those fees."