For Australians relying on a vehicle for work, family commitments or business operations, the findings are significant. Car finance is often arranged quickly at the point of sale, through a dealer, broker or lender partner. That convenience can be valuable, but it also means borrowers may feel pressure to make a decision before fully understanding the interest rate, establishment fees, add-on costs and what happens if repayments become unaffordable.
ASIC found that car loan costs varied widely. Many loans included both a lender establishment fee and a distributor establishment fee, and in one severe example a borrower paid more than $9,000 in fees on a loan of just over $49,000. The regulator also raised concerns about some borrowers being left with substantial debt after repossession, meaning the car was gone but a large loan balance remained.
The message for buyers is not that all car finance is problematic. It is that structure matters. A lower monthly repayment may be achieved by stretching the loan term, adding a balloon payment or rolling fees into the amount borrowed. These choices can make a vehicle feel more affordable upfront while increasing the total cost over time. Before signing, borrowers should compare the advertised rate with the comparison rate, check all fees, understand early repayment conditions and model repayments under realistic household or business cash flow scenarios.
The report also puts attention on the role of dealers and brokers. Where a loan is arranged through a third party, ASIC expects lenders to monitor whether customers are receiving fair outcomes. For borrowers, that makes it sensible to ask who is being paid, how they are paid, whether multiple lenders are being considered and whether the recommended loan suits the vehicle, income, credit profile and intended use.
This story also extends recent discussion about the scale of non-bank motor finance in Australia. Non-bank lenders can increase competition and support borrowers who do not fit standard bank criteria, but stronger oversight is essential if the sector is to maintain trust. From 1 October 2026, AFIA’s new Finance Industry Code of Practice is expected to raise expectations around transparency, hardship support and distribution oversight.
For anyone planning to buy a new or used car, the practical takeaway is simple: pause before signing, request the full cost breakdown, and compare finance options rather than relying on the first offer placed in front of you.
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