In an article headed “Banking royal commission to hear cases like Amy’s: 22yo, new job and a car loan in minutes” the ABC takes one of the big four banks to task over a $35,000 car loan approval that was not expected and which did not suit the customer.
The ABC reported that the Royal Commission into Misconduct in the Banking, Superannuation, and Financial Services Industry (which commenced on Monday, February 12) is sure to hear some harrowing stories of bad behaviour by banks.
“Even as the banks tell everyone who will listen they have lifted their game — and in some areas they have — the bad news stories keep on coming. For example, the case of Amy.”
Since leaving school Amy Nivison-Smith, now 22 years old, “has worked in a variety of casual and part-time jobs, but last November she secured her first full-time role. While still on probation, with no guarantee of ongoing employment, she approached the National Australia Bank to borrow $35,000 to buy a car.”
She told the ABC “I wasn’t actually expecting to get approved, and somehow I did. I was in there for maybe 20 minutes and then I was out having been told I was conditionally approved for the loan having no credit history or anything like that.” She was also sold a credit card. The article includes a photograph of Amy with a new car.
ABC: “The interest rate on her car loan was 14.69 per cent, and then without warning, three weeks ago it was increased to 15.69 per cent. If Ms Nivison-Smith takes the full seven years to discharge the $35,000 loan, she calculates she will be paying back about $60,000. Given her low income, she can only afford the $700 a month repayment because she lives at home.… Ms Nivison-Smith’s parents believe NAB’s actions in their daughter’s case are motivated by greed.”
Amy’s mother is quoted as saying “I think it’s actually appalling. I am disappointed, I am upset that she’s been allowed to get a loan — a personal loan — for that amount of money when she has limited income. She has no money, no savings record; still living at home and we are still supporting her.”
The point of the article seems to be: just look at this terrible example; there sure is a real need for the royal commission.
What the ABC article does not say
The ABC article does not give a balanced approach. Amy’s mother may be justified in criticising the bank. However, that is by far not the end of the story. There’s a wise ancient saying: “caveat emptor” meaning let the buyer beware. Furthermore when outlaying money a healthy dose of common sense and good Christian principles should be applied. For example:
Responsibility and stewardship: the young lady is quoted as saying “I wasn’t actually expecting to get approved”. She didn’t have credit history, or money, and presumably was uncertain whether she could really afford the loan. That being the case she should not have approached the bank. Furthermore getting a personal loan for a $35,000 car in her situation will cost her dearly in interest. That is simply bad stewardship. If she truly needs transport there are much cheaper options available.
Do not covet: a lot of purchases are driven by advertising, preying on the human inclination to covet.
The tenth commandment, given in Exodus 20, is a wonderful antidote and principle by which to live. It is not only right, it also saves a lot of stress, regrets and tears.
Trying to keep up with the Joneses is not a good road to travel; instead be satisfied and thankful with what you have.
Look beyond the actual purchase: The article says that Amy “can only afford the $700 a month repayment because she lives at home”. The article says nothing about the running costs, insurances (especially for people under 25) and depreciation.
The ABC’s article, by not giving a balanced approach, criticises the bank, but is mum about individual accountability. Lack of balance and good leadership isn’t responsible and fits into a bigger picture, namely the social malaise that we should blame others for our own mistakes and ask the government to dream up more “nanny” legislation to punish others for our stupidity. It takes two to make a deal. If one party cannot afford the deal and wisely abandons it, the “problem” of the other party’s “greed” will hardly be an issue.