Personal Loan Finance Online :: News
SHARE

Share this news item!

ASIC Calls for Strengthened Consumer Protections in Car Finance

Regulator Highlights Need for Improved Oversight Amid Rising Complaints

ASIC Calls for Strengthened Consumer Protections in Car Finance?w=400

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

The Australian Securities and Investments Commission (ASIC) has intensified its scrutiny of the motor vehicle finance sector, urging lenders to bolster consumer protections and enhance oversight mechanisms.
This move comes in response to a notable increase in complaints regarding car finance arrangements and concerns about the adequacy of current lending practices.

ASIC's review has identified several areas where improvements are necessary. A significant finding is the reliance of many lenders on intermediaries, such as brokers and dealerships, to arrange car finance. This practice has led to inconsistencies in loan costs and a lack of uniformity in consumer experiences. For instance, the review uncovered instances where loan establishment fees varied dramatically, with some consumers being charged as much as $9,000 on a $49,000 loan.

Furthermore, the review highlighted that nearly half of all consumers who defaulted on their car finance repayments did so within the first six months of the loan term. This early default rate raises questions about the adequacy of lenders' assessments of borrowers' financial capacities and the overall suitability of the loans provided.

In response to these findings, ASIC has issued tailored action letters to eight lenders involved in the review, recommending enhancements in staff training, risk management, hardship processes, and governance frameworks. The regulator has emphasized the need for lenders to conduct regular audits and checks to ensure that loans are granted responsibly and in the best interest of consumers.

ASIC Commissioner Alan Kirkland stated, "We’ve identified areas where lenders must lift their standards, or risk leaving consumers exposed to poor financial outcomes. ASIC will take enforcement action to protect consumers where appropriate." This statement underscores the regulator's commitment to ensuring that the car finance sector operates transparently and fairly.

Consumer advocacy groups have welcomed ASIC's proactive approach. The Consumer Action Law Centre, for example, has long advocated for reforms to address harmful practices in the used-car market, particularly those related to point-of-sale financing in car yards. The Centre's CEO, Stephanie Tonkin, noted that such practices often trap consumers in high-cost loans for vehicles that may not meet their expectations or needs.

As the review progresses, ASIC plans to delve deeper into the origins of the vast cost differences and the high rate of early defaults. The regulator has signaled its commitment to taking enforcement action where appropriate to protect consumers and uphold the integrity of the car finance sector.

For consumers considering car finance options, this review serves as a crucial reminder to thoroughly assess loan terms, be wary of excessive fees, and ensure that repayment obligations align with their financial capabilities. Engaging with reputable lenders and seeking independent financial advice can also help mitigate the risks associated with vehicle financing.

Published:Wednesday, 3rd Dec 2025
Source: Paige Estritori

Please Note: If this information affects you, seek advice from a licensed professional.

Share this news item:

Finance News

APRA's New Cap on High Debt-to-Income Home Loans Explained
APRA's New Cap on High Debt-to-Income Home Loans Explained
02 Mar 2026: Paige Estritori
The Australian Prudential Regulation Authority (APRA) has announced a significant policy change aimed at mitigating risks in the housing market. Effective February 2026, APRA will impose a cap on high debt-to-income (DTI) home loans, limiting such loans to 20% of new home lending. This measure applies to both owner-occupiers and investors, with an exemption for new housing developments. - read more
Australia's Household Debt: A Global Perspective
Australia's Household Debt: A Global Perspective
02 Mar 2026: Paige Estritori
Recent data reveals that Australia's household debt has escalated to 182% of disposable income, positioning the nation as having the second-highest household debt globally. This significant figure underscores the growing reliance on borrowing among Australian households, particularly in the realm of mortgage lending. - read more
RBA's Advisory on Prudent Lending in a Changing Economic Landscape
RBA's Advisory on Prudent Lending in a Changing Economic Landscape
02 Mar 2026: Paige Estritori
The Reserve Bank of Australia (RBA) has issued a cautionary note to financial institutions, advising them to maintain prudent lending practices despite improvements in borrower financial health. Recent data indicates that the proportion of mortgage holders spending more than they earn has decreased to approximately 3%, down from 5% in mid-2024. This improvement is attributed to factors such as tax cuts and easing inflation. - read more
CEFC and Hyundai Capital Collaborate to Make EV Loans More Affordable
CEFC and Hyundai Capital Collaborate to Make EV Loans More Affordable
02 Mar 2026: Paige Estritori
The Clean Energy Finance Corporation (CEFC) has announced a significant partnership with Hyundai Capital Australia (HCAU), committing up to $60 million to make electric vehicle (EV) ownership more accessible for Australians. This initiative is designed to reduce the upfront costs associated with purchasing EVs, thereby encouraging more households and small businesses to transition to cleaner transportation options. - read more


Personal Loans Articles

Your Guide to Debt Consolidation Loans in Australia
Your Guide to Debt Consolidation Loans in Australia
Debt consolidation loans are a financial strategy many Australians use to manage their debt more effectively. Essentially, they allow you to combine multiple debts, such as credit cards, personal loans, and other liabilities, into a single loan with one monthly payment. This can make it easier to manage your finances and could potentially reduce the amount of interest you pay over time. - read more
Are Unsecured Loans the Safer Choice? Weighing Your Options
Are Unsecured Loans the Safer Choice? Weighing Your Options
Unsecured loans are a type of lending product that allow borrowers to obtain funds without the need to offer collateral. This means that the loan is not tied to any physical asset, such as a house or car, which can be seized by the lender if the borrower defaults. - read more
Refinancing Your Loan: Is It the Right Move for You?
Refinancing Your Loan: Is It the Right Move for You?
Loan refinancing is the process of replacing an existing loan with a new loan, usually with better terms. This financial strategy can be applied to a range of loans including mortgages, car loans, and personal loans. By refinancing, borrowers aim to achieve a more favourable interest rate, adjust the loan term, or consolidate debts. - read more
Loan Eligibility and Approval: What You Need to Know
Loan Eligibility and Approval: What You Need to Know
Navigating the world of personal loans in Australia can be daunting, but understanding the basics of loan eligibility and approval is essential. Personal loans can be a valuable financial tool, helping you manage unforeseen expenses or consolidate debt. However, securing a loan is often dependent on a variety of factors, and being prepared can make all the difference. - read more


Free Assessment

Loan Amount:
Postcode:

All quotes are provided free and without obligation by a Specialist from our National Broker referral panel. See our Privacy Statement for more details.


Knowledgebase
Principal:
The original sum of money invested or lent, on which basis interest and returns are calculated.