Question Two:  

Eric purchased a brand new car for $35,000.  

He traded in his car and had some cash to make up $10,000 of the purchase price. The remaining $25,000 he borrowed through finance offered by the car yard.

Eric didn’t read the signs in the car yard property.  The signs displayed large writing with ’12 months’ interest free! No minimum payment.’  In small print at the bottom of the signs was written ‘Loan reverts to full capital if not paid within the interest free period.  Interest payable after expiration of the interest free period.’  

Eric also didn’t read the contract which the salesman got him to sign.  The contract stated: ‘Minimum weekly payments apply after interest free period.  The car yard can repossess the vehicle at any time, in the event of default. Consumer laws do not apply’

Eric paid $400 per week for 12 months but was unable to pay off the loan in full during the interest free period.  He received a statement from the car yard which said his new minimum weekly payment was $600. Eric can’t afford this and pays $450.  

The car yard contacts Eric to repossess the vehicle and advises him that he owes $25,000 plus interest.    

What are the legal issues in this scenario?