ASIC Just Put Car Finance on Notice — Here's What Every Aussie Buyer Needs to Know

What ASIC Actually Found

In late 2025, the Australian Securities and Investments Commission (ASIC) completed a sweeping review of Australia's motor vehicle finance sector. The trigger? A surge in complaints from everyday Australians getting burned by excessive fees and loans they couldn't afford.

The findings were damning. ASIC uncovered loan establishment fees as high as $9,000 on a $49,000 loan — that's nearly 18% of the loan amount gone before you've even made a single repayment. Most borrowers had no idea that fee was negotiable, or even what it was for. It was just buried in the contract at the dealership.

Even more alarming: almost half of all consumers who defaulted on their car finance repayments did so within the first six months of the loan. That's not bad luck. That's a lending system approving people for loans they were never going to be able to afford — and someone profiting from it.

ASIC's review also found that in cases where cars were repossessed and sold, almost 90% of consumers still owed more than half their original loan amount. In other words: the car was gone, and the debt wasn't.

Why Does This Keep Happening?

The short answer: most car finance in Australia is sold at the dealership, where the person arranging your loan is also the person trying to sell you the car. That's a conflict of interest baked into the system.

ASIC found that most lenders rely on intermediaries — brokers and dealerships — to arrange finance, and that oversight of those intermediaries has been weak at best. Problematic sales tactics were found to be widespread, with a lack of regular audits meaning bad behaviour often went undetected for years.

The Consumer Action Law Centre put it bluntly: car finance sold at the point of sale can trap consumers in high-cost loans for cars that break down soon after purchase. Their lawyers have witnessed consumers being pressured into applying for loans they cannot afford — a problem that has been going on for years.

This isn't a niche issue either. Australians are collectively borrowing around $4.9 billion every single quarter in fixed-term personal loans for road vehicles. Car loan borrowing is now at an all-time high, and average car loan interest rates have been trending upward — hitting 7.73% per annum as of March 2026. The average loan for a new car is $46,055. The stakes have never been higher.

The Hidden Cost of Dealer Finance: What to Watch For

Whether you're buying new or used, here are the specific things ASIC's review says you should scrutinise before signing anything:

• Loan establishment fees: These can legally vary wildly between lenders, but some are genuinely outrageous. Always ask for the fee in dollar terms, not buried in a comparison rate. Compare at least two to three lenders before you sign.
• The comparison rate vs. the interest rate: Dealers love quoting a low headline interest rate. The comparison rate includes fees and is the number that actually matters. A 5.9% interest rate can become an 8%+ comparison rate once fees are added.
• Add-on insurance products: Paint protection finance, tyre and wheel cover, consumer credit insurance — these are often loaded onto dealer loans at the point of sale. ASIC has previously found these products deliver poor value to consumers. Ask yourself: do I actually need this, and am I being given a genuine choice?
• Balloon payments and residual risk: Many dealer finance products — including Guaranteed Future Value (GFV) loans — include a large lump sum payment at the end of the loan term. If you can't pay it, you either refinance (more interest) or hand the car back (and get nothing back from your years of repayments).

What Is a GFV Loan — And Why Most Australians Walk Away With Nothing

Guaranteed Future Value (GFV) loans are being heavily pushed by manufacturers across Australia right now — from Toyota and Ford to Volkswagen, Hyundai, Kia, and Land Rover. The pitch is simple: lower monthly payments. The catch is everything else.

Here's how a standard GFV loan works: the manufacturer locks in a predetermined minimum value for your car at the end of the loan term. Your repayments are lower because you're not paying off the full value of the car — just the difference between what it's worth now and what they say it'll be worth later (the balloon payment). At the end, you either pay that balloon to keep the car, trade it in with the same manufacturer, or hand it back.

The problem? Most Australians hand the car back and walk away with absolutely nothing. Years of weekly payments, and zero equity to show for it. Meanwhile, the manufacturer recycles the car and resells it. They win twice.

There are also strict conditions that can catch you out: kilometre limits, fair wear-and-tear requirements, and mandatory servicing through the dealer network. Exceed your km allowance? You'll be charged. Minor damage that doesn't feel excessive to you? The manufacturer may disagree — and their definition is the one that matters.

New vehicles in Australia are also not cheap. The average price of a new car in 2026 ranges between $45,000 and $60,000 depending on brand and type, with SUVs and utes commanding even more. You could be making repayments on a $50,000+ asset for three to five years and walk away with nothing to show for it.

What ASIC Is Doing About It — And What You Should Do Right Now

ASIC has issued tailored action letters to eight major lenders, calling out areas including better training of dealership finance staff, stronger consumer harm monitoring, and improved governance around how finance is distributed through dealerships and brokers. Full findings are expected to be published in 2026. Regulators are clearly watching.

But regulation takes time. In the meantime, here's what you can do to protect yourself:

• Get pre-approved before you walk into a dealership. When you already have a loan offer from a bank or non-bank lender, you have real bargaining power. The dealer's rate suddenly becomes negotiable.
• Always ask for the comparison rate AND the total loan cost in dollars. Not just the weekly payment. The total. Over the full term. In dollars.
• Ask what the establishment fee is — in dollars — before you apply. If it's more than a few hundred dollars, ask why, and compare it against other lenders.
• Understand what you get back at the end of the loan. On a standard GFV loan, the honest answer is usually: nothing. Ask the question directly.
• Consider whether a non-traditional structure could work better for you. Some newer finance products are designed to give you lower repayments AND return equity to you at the end — not just to the manufacturer.

The Bottom Line

Australia's car finance market is under more regulatory scrutiny than it has been in years. The regulator has confirmed that consumer harm in car finance — particularly in used car finance for vulnerable Australians — is a key enforcement priority for both 2025 and 2026. That's not a warning. That's a signal that the current system has been failing people, and that change is coming.

Until that change arrives, the best protection you have is information. Know what you're signing. Know what the fees are. Know what you'll actually own — or not own — at the end of your loan. And if the numbers feel confusing or the salesperson is rushing you: slow down, walk out, and compare your options elsewhere. Please speak to a financial adviser before committing to any car finance arrangement.