The regulator’s June 2026 review examined data from more than 350,000 car loans across eight providers, including several large names in vehicle finance. Its findings point to a familiar risk for consumers: the headline interest rate is only one part of the true cost of a loan. Establishment fees, distributor fees and add-on charges can materially change the value of a deal, particularly for lower-value vehicles or borrowers with fewer options.
ASIC found that many loans carried both a lender establishment fee and a distributor establishment fee. In some cases, the combined cost was substantial enough to make a major difference to the amount ultimately financed. One of the more severe examples involved fees of more than $9,000 on a car loan of just under $50,000, demonstrating why borrowers should look carefully at total loan cost rather than focusing only on repayment size.
The review also raises questions about how lenders monitor dealers, brokers and other distributors. ASIC’s message is that lenders cannot simply outsource the sales process and then step back from customer outcomes. If a distributor is presenting, arranging or influencing a loan, the lender still needs proper systems to identify poor outcomes, unsuitable sales patterns and emerging financial stress.
For households and small business owners, the practical lesson is to slow down before signing finance at the point of sale. A car may be needed urgently for work, family transport or business operations, but urgency can make comparison harder. Borrowers should check the comparison rate, all upfront and ongoing fees, balloon payments, early exit charges and whether insurance or extras are being bundled into the finance.
ASIC’s concerns around hardship are also important. The regulator found inconsistent support when borrowers fell behind, and in a sample of repossessed vehicles, most borrowers still owed more than half of their original loan amount after the car was sold. That is a serious warning that repossession may not end the debt problem.
Before committing to vehicle finance, borrowers should consider modelling repayments under different rate, fee and income scenarios. If repayments already look tight, a cheaper vehicle, larger deposit, shorter list of extras or different lender may be worth considering. The latest ASIC review is not just a regulatory story; it is a reminder that car finance should be compared with the same care as any other major financial commitment.
Please Note: If this information affects you or is relevant to your circumstances, seek advice from a licensed professional.
