ASIC Just Told Lenders They Can't Hide Behind Dealers Anymore — Here's What That Means for Your Car Loan

What ASIC Actually Found

Australia's financial regulator, ASIC, published Report 832 — Lifting the Bonnet: ASIC's Review of Car Loans — after examining data from more than 350,000 car loans across eight of Australia's largest finance providers. The headline finding was blunt: some lenders are not paying enough attention to what happens to borrowers after a dealer or broker sells one of their loan products.

ASIC Commissioner Alan Kirkland said it plainly: responsibility for consumer outcomes cannot be outsourced. In other words, a lender cannot hand a loan product to a car dealership, collect the repayments, and then claim it has nothing to do with whatever the dealer said or did to get you to sign.

Complaints against the motor vehicle finance sector have been rising. ASIC's review found shortcomings in lenders' oversight of distributors — the brokers and car dealers who sell their loans on their behalf — and has formally put the industry on notice to lift its standards.

Why Dealers Are Selling Finance in the First Place

Here is something most Australians don't think about when they're sitting in a dealership finance office: the person presenting you with a loan contract is not a neutral party. Dealers earn commissions when they place customers into finance products from lender partners. The higher the interest rate on the loan, the more the dealer can sometimes earn. That structure creates a powerful incentive to steer you toward a particular product — not necessarily the best one for your situation.

This isn't a secret. It's a documented feature of how dealer finance works in Australia. ASIC's review identifies it as a core risk to consumers, precisely because lenders have been allowing distributors like dealers to operate with insufficient oversight.

The Numbers Behind the Problem

Here's some context on why this matters financially. Right now, the lowest advertised secured car loan rate in Australia sits around 5.66% p.a. But the Reserve Bank of Australia reports that the average fixed-term personal loan rate — which includes car loans — is 9.06% p.a. That is a gap of more than three percentage points between the headline rate and what most Australians are actually paying.

On a $45,000 loan over five years — roughly the average new car price in Australia in 2026 — the difference between a 5.66% rate and a 9.06% rate is over $4,200 in additional interest across the life of the loan. That's money going to the lender and, in some structures, contributing to the dealer's margin. That is not a rounding error. That is a year's worth of grocery bills for many Australian households.

And average new car prices in Australia in 2026 are estimated between $45,000 and $60,000 depending on the brand and vehicle type — meaning many borrowers are financing more than that. The higher the loan amount, the bigger the impact of that rate gap.

The Specific Harms ASIC Called Out

ASIC's report doesn't just wave a hand at vague concerns. It cites concrete examples of harm, including:

• Big variations in car loan costs — borrowers with similar risk profiles paying dramatically different rates, often depending on which dealer arranged their finance.
• Cars repossessed after lenders declined hardship assistance requests — leaving consumers with large outstanding debts and no vehicle.
• Insufficient oversight of high-volume distributors — meaning some of the busiest dealers had the least scrutiny applied to the loans they were selling.

ASIC also took action outside this review. In April 2026, the Federal Court ordered Money3 Loans to pay $1.55 million in penalties for breaching responsible lending obligations when providing car finance to vulnerable consumers. A separate case found that Diamond Wheels and Keo Automotive provided car loans to consumers without a credit licence and charged unlawful and excessive interest charges.

These are not isolated incidents. They reflect a system where lenders have treated consumer protection as someone else's problem.

What Lenders Are Supposed to Do Now

ASIC's intervention has already driven some changes. All eight lenders reviewed have improved their hardship processes, and many have strengthened product distribution conditions and governance over high-volume distributors. But ASIC has been clear that much more needs to be done — and that it will be monitoring progress and taking action where lenders fail to comply with their legal obligations.

The Australian Finance Industry Association acknowledged the findings and noted that customers must be treated fairly and respectfully and that lenders must continue to lift standards. That's a welcome statement. But for an everyday Australian sitting in a dealer's finance office today, regulatory pressure on lenders doesn't automatically translate into a better deal in front of you right now.

What This Means if You're Buying a Car in 2026

ASIC's findings don't mean every dealer is acting badly. Most are doing the right thing. But the structure of dealer finance creates conflicts of interest that even a well-intentioned salesperson operates within. Here are the practical implications for you as a borrower:

• The rate the dealer quotes is not the only rate available to you. It is the rate available on the lender's product that the dealer is authorised to offer. Getting a pre-approval from a bank, credit union, or online lender before you walk into a dealership gives you a direct benchmark.
• The comparison rate is your friend — use it. If a loan has a noticeably higher comparison rate than its advertised rate, that gap is made up of fees and charges. Demand an explanation before signing.
• You have the right to take the paperwork home. No legitimate dealer should pressure you into signing a finance contract in a single sitting. If they do, that pressure itself is a warning sign.
• Hardship assistance is a right, not a favour. If you ever find yourself unable to meet repayments, contact your lender directly and early. ASIC's findings show that hardship processes have been inadequate — which means you may need to be persistent. Document every contact.

A Different Kind of Car Finance

The problems ASIC identified are structural. They exist because traditional car finance is designed to extract maximum interest from borrowers over the life of a loan, with dealers incentivised to place you in whatever product earns them the most. At the end of a standard loan — or a standard Guaranteed Future Value loan — you hand the car back or pay it off, and you walk away with nothing.

Milam is built differently. With Milam, you get lower weekly payments and an equity payout when you return the car at the end of your term. Instead of the residual value disappearing into the lender's pocket, it comes back to you. That's not how traditional car finance works — and that gap is exactly what ASIC's report is talking about when it says lenders need to put consumers at the centre of how their products are designed, sold and serviced.

The regulator is pushing the industry in the right direction. But you don't have to wait for the industry to catch up. You can choose finance that was designed with your outcome in mind from the start.

This article is general information only and does not constitute financial advice. Please speak to a financial adviser before making any borrowing decisions.