Bowla’s Car Rentals, EXIM Bank in car loan fuss
THERE is an ongoing feud between Bowla’s Car Rentals and the National Export-import (EXIM) Bank of Jamaica regarding the recall of a loan not in arrears with a maturity date of 2025.
Principal of Bowla’s Car Rentals Pauline Bowla Andrade told the Jamaica Observer that in past years she had a cordial relationship with the bank, but it soured in 2021 when she decided to sell a bus and add another car to her fleet of vehicles.
“I took a loan in 2018 valued at $16 million. All my payments are up to date. The pandemic hit in 2020 and I took a moratorium from March 2020 to March 2021. My payments resumed in April 2021 and are up to date. For this $16-million loan, my balance is $6 million. The bank has a lien on three cars as surety for this loan. The three cars are valued at $12 million and the selling price is $10 million. This is from a recent valuation done few weeks ago,” Bowla Andrade told the Sunday Observer.
“I had a bus that wasn’t bringing in income so I decided to sell it and the bank was okay with that, they said the payments and proceeds would have to go through them, I said fine. The money from this sale was used to purchase a 2021 car. Now EXIM wants to put a lien on this new car and I refuse to allow it because the balance on the loan is $6 million and the selling price of the three cars that already have a lien is $10 million, which easily covers what is owed. Because I refuse to put a lien on the car, the bank went ahead and did so at the tax office. I still refused to sign and they in turn recalled the loan and have demanded that I pay up in full, though the loan is not in arrears and does not mature until 2025.”
Consequently, Bowla Andrade is calling foul on the situation that has left both institution at loggerheads, regarding the move by EXIM as unconscionable and an injustice.
But manager of EXIM Bank Lisa Bell said Bowla Andrade has been a good client of the bank, however, the relationship began to sour as she did not keep a commitment which she agreed to before the sale of the bus and purchase of the 2021 vehicle.
“In a bank when we agree to lend you money you do sign what we call a commitment letter, which says we promise to give you money, you promise to give us this. In this particular case, she was selling a vehicle which we had a charge over. If you’re selling it you have to give us the proceeds or we have to agree to give you the proceeds. She was replacing it by buying a new car. As you can expect with motor vehicles, cars depreciate very quickly, crash, etcetera, so what we do is maintain a certain margin between the value of the vehicle and what you are borrowing from us,” Bell said.
“Let’s say you want to buy a car that is valued at $10,000. We won’t lend you $10,000. We may lend you $8,000 because we know the minute you drive the car off the lot, it depreciates in value and that is in a way to maintain that if anything goes wrong, we still will be able to recover the Government’s
money. In this particular case, we said to her, yes you can sell the vehicle, but when you get the new vehicle we need to take a charge over it in order to maintain the margin. We have a vehicle, we are allowing you to sell it, but we want to maintain the margin so you have to give us a charge over the newer vehicle. She failed to do so. We have said to her on numerous occasions it’s not that we want to recall the loan or we don’t want to give you the money, we just want to secure it in the event that anything goes wrong. My understanding is despite numerous attempts to get her to do what she committed to do, she is resisting...this is not a case where we are taking the car. You can still keep the car, you have it and if you pay the loan as you should, it should work normally, but we have to have the car to preserve the margin.”
Bell said the impasse has prompted some referral to the bank’s legal department because now she is in breach of the agreement she signed.
“It is not a case where we are treating her badly. I personally spoke to her about the situation. She believes the value of the vehicles [with a current bill of sale] is greater than what she owes us and that’s a natural analysis to make, but it does not include the bank’s policy that says we have to keep a certain margin. We recalled the loan in an effort to get her to come to the table, because she is in breach of the agreement. It’s not because she hasn’t paid, but if tomorrow she calls and says she crashed the car, we are in trouble. We have helped her, we have said to her come to the table. We never just recalled the loan, we made calls and calls. It is not a case where we are trying to be difficult. We are not asking for anything she didn’t sign for,” Bell reasoned.
Meanwhile, with the deliberations at a standstill, things took a turn as it was revealed that Bowla Andrade paid down $2 million on the loan, hence preserving the security margin on the loan. Bell said this now means that legal action is ceased and the loan goes on, but she still has to sign a new offer letter.
“So she still has the loan with us, legal action was ceased as a result of the margin being preserved and the loan goes on. She could have done either of the two...we no longer require the bill of sale. We have revised what is call her offer letter, which went out today [Thursday] to her.
Once she executes it she does not have to provide us with the bill of sale any more,” Bell said.
Bell added: “There are two instruments the banks uses to secure its rights to sell. One you execute and one you put at the tax office. The one at the tax office was put on, but she refused to sign the bill of sale. When she says the lien, she is referring to the lien at the tax office. Now that she has paid down the $2 million, once she signs that letter we will release our lien and she will no longer be required to give us a bill of sale. That will clear up the matter once she signs off on it, but we will not release that lien until she executes the letter. If we get the bill of sale, there is no more action.”
Bowla Andrade confirmed that she had paid down the loan, but says she will not be signing any letter as it was presented to her in a threatening way, demanding that she signs and returns by August 4, 2021 or the offer will be withdrawn. Furthermore, she said she does not want anyone else to go through what she has been through with EXIM.
“This client doesn’t want anybody else to go and suffer the ill-fate and suffer what she went through with EXIM. These organisations are there to help small business entrepreneurs to grow and to survive and these are the methods in which they are doing. EXIM has to change their way of operating. They are behaving like the don man,” she said.