ASIC Slams Car Finance Sector Over ‘Unaffordable Loans’ and $9,000 Fees

Australia’s financial watchdog has delivered a scathing assessment of the car finance industry, revealing systemic issues that are leaving consumers financially vulnerable.

The Australian Securities and Investments Commission (ASIC) launched its review following a surge in complaints about high car finance costs. The review primarily focused on lenders’ reliance on intermediaries, such as brokers and dealerships, to arrange loans.

ASIC Commissioner Alan Kirkland pointed to dramatic statistics that raise serious questions about responsible lending practices:

Excessive Fees: The review uncovered significant inconsistencies in loan costs, including an instance where a customer was charged an establishment fee as high as $9,000 on a loan of only $49,000.

Almost half of all consumers who defaulted on their car finance repayments did so within the first six months of the loan.

Of vehicles that were repossessed and sold, nearly 90% of consumers still owed more than half of their original loan amount.

“These numbers raise questions about whether these consumers have been given loans they cannot afford to repay, which is consistent with key themes in complaints that led to this review,” Kirkland stated.

The first phase of the review examined every stage of the customer loan journey, highlighting the damaging impact of unaffordable loans. ASIC has already responded by issuing tailored action letters to specific lenders, outlining areas where standards must be lifted.

ASIC will continue its probe to understand the origins of the vast cost differences and the high rate of early defaults.

“We’ve identified areas where lenders must lift their standards, or risk leaving consumers exposed to poor financial outcomes,” Commissioner Kirkland warned. “ASIC will take enforcement action to protect consumers where appropriate.”

The regulator’s detailed findings and information on lenders’ responses are scheduled for release in 2026.