ASIC Just Read 350,000 Car Loans. The Fee Findings Are Alarming.

In June 2026, the Australian Securities and Investments Commission released Report 832 — formally titled Lifting the Bonnet: ASIC's Review of Car Loans. It is the most comprehensive review of Australian car finance in years, and the numbers it uncovered are confronting.

ASIC examined loan data from eight of Australia's largest car finance providers, covering more than 350,000 loans written between March 2023 and March 2025. The regulator was looking for consumer harm. It found plenty.

The most jaw-dropping finding? Establishment fees on a single loan reaching $9,000 on a loan of approximately $49,000 — equal to 18% of the total loan amount, before a single weekly repayment had been made.

Wait — What Is an Establishment Fee, Exactly?

When you take out a car loan, the lender charges you a fee to set up the loan. That's the establishment fee. Fair enough — admin costs money. But here's what most Australians don't realise: there are often two establishment fees, not one.

ASIC's report found that car loans typically incurred a lender establishment fee ranging from $299 to $995, plus a separate distributor establishment fee — charged by the broker or car dealer who arranged the loan — ranging from $912 to $2,500 or more. That's two fees, stacked on top of each other, before interest even enters the picture.

In the worst cases ASIC reviewed, those combined fees blew out to $9,000. On a $49,000 loan. That is not a typo.

Here's What That Actually Costs You in Real Money

Let's put that into Australian numbers you can feel. The average new car loan in Australia is currently around $46,000, and the average car loan interest rate across all borrowers sits at 8.92% per annum. Monthly repayments on that loan over five years come to roughly $710 a month — or about $164 a week.

Now add $3,000 in combined establishment fees (a very realistic midrange figure based on ASIC's findings). That's more than four months of repayments gone before you've driven a single kilometre. Add $9,000 in fees — the worst-case ASIC documented — and you've effectively paid the first year of your loan before leaving the dealership car park.

And here's the kicker: those fees are usually rolled into your loan. That means you're not just paying $9,000 in fees — you're paying interest on those fees for the entire life of the loan.

The Dealer Finance Playbook (And Why It Works)

ASIC didn't just find high fees. It found that the system is structurally designed to keep borrowers in the dark. Car loan fees and interest rates varied widely depending on which lender you ended up with — and that lender was often chosen not by you, but by the dealer or broker who arranged your finance.

The report found that some lenders were not adequately monitoring the outcomes their dealership and broker distribution channels were producing for borrowers. In plain English: the dealer was picking your lender, and nobody was checking whether that was actually good for you.

ASIC Commissioner Alan Kirkland put it bluntly: "Responsibility for consumer outcomes cannot be outsourced."

The report also uncovered something even more troubling: some dealership staff were trained to override customer objections to certain types of finance — including objections to not paying cash. You walk in ready to buy outright, and the salesperson's job is to talk you into a loan instead. Why? Because the dealer earns a commission when you sign a finance contract.

Median Interest Rates Varied From 10% to 22%. That's Not a Typo Either.

ASIC found that median interest rates across the eight lenders it reviewed ranged from around 10% to as high as 22%. The difference between those two rates on a $34,000 loan over five years is enormous — we're talking tens of thousands of dollars in extra interest over the loan term.

Meanwhile, the best secured car loan rates available in Australia right now start from around 5.66% per annum. The average rate across all borrowers is 8.92% p.a. For borrowers with bad credit, rates average 13.74% p.a. through some lenders — and go higher still.

That spread between the best rate available and the worst rate you might actually get is not random. It is, in many cases, a direct result of which dealership you walked into, and whether that dealership's finance manager was steering you toward the lender who paid them the highest commission.

What Happens When You Can't Keep Up With Repayments?

Here's where the ASIC report gets genuinely distressing. Nearly half of all borrowers who defaulted on their car loan did so within the first six months. That's not people who hit hard times years later — that's people who were approved for loans they seemingly couldn't afford from day one.

And when borrowers fell behind and asked for hardship support? ASIC found the support was inconsistent at best. Some lenders refused hardship applications or continued debt collection even when a hardship variation was already in place.

For those whose cars were ultimately repossessed, the situation was grim: in a sample of 250 repossessed loans, 90% of borrowers still owed more than half their original loan amount after the car was sold. Some owed more than 100% — meaning they lost the car and still had the full debt.

ASIC's infographic for REP 832 is titled "Cars repossessed, debts left behind." That says everything.

Why This Happens: Inflated Car Values and High LVRs

Consumer advocates flagged another layer of the problem: ASIC's report found loan-to-value ratios (LVRs) ranging from 97% to 127%. In some cases, lenders were approving loans for more than the car was actually worth — sometimes inflating the car's assessed value in the process.

When the car is eventually repossessed and sold at true market value, there's a guaranteed shortfall. The borrower owes the difference. Combine that with establishment fees, interest, and a used car market where values have been softening — and you have a recipe for debt that outlasts the vehicle.

The ATO Just Updated the Car Limit Too — Here's the Quick Version

One more number worth knowing if you're buying through a business or claiming vehicle deductions: the ATO's car depreciation limit for the 2026–27 financial year is $69,883. That's the maximum value you can use to calculate depreciation on a passenger vehicle for tax purposes. If your car costs more than that, you can only depreciate up to $69,883 — no matter what the car actually cost you. And from 1 July 2026, the cents-per-kilometre rate for claiming motor vehicle expenses has been updated to 91 cents per kilometre. Speak to a financial adviser about how these thresholds apply to your situation.

So What Should You Actually Do Before Signing a Car Finance Contract?

What If You Want a Different Kind of Deal Entirely?

The entire ASIC investigation was triggered by a system where borrowers pay upfront — in fees and interest — and walk away with nothing. A standard car loan means you give the lender money every week, the car depreciates, and at the end of the term you're left with an ageing asset and zero return on all that interest paid.

That's actually why Milam was built. Instead of a standard loan where you pay fees, pay interest, and get nothing back, Milam structures car finance so you get lower weekly payments and an equity payout when you return the vehicle. You build something from the deal, rather than simply funding someone else's margin.

It's a fundamentally different model — and given what ASIC just found about how the traditional car finance industry treats Australian borrowers, a different model seems well overdue.

This post is general information only and does not constitute financial advice. Speak to a financial adviser about your personal situation before making any finance decision.

Fee reality check

ASIC found establishment fees reaching $9,000 on a $49,000 loan — equal to 18% of the loan amount before a single repayment is made. That fee is usually rolled into your loan, meaning you pay interest on it for years.