News

Consumer advocates nationwide have welcomed the release of the Australian Securities and Investments Commission (ASIC) report ‘Lifting the bonnet: ASIC’s review of car loans’. ASIC’s Indigenous Outreach Program reviewed car loans from eight across a two-year period from March 2023 – 2025 and have painted a comprehensive and troubling picture of the consumer harm fuelled by car loans.

“This report shines a light on the chronic issues we see on our frontlines with car financing,” said Consumer Action Law Centre CEO, Stephanie Tonkin. “Loan products that target vulnerable consumers, consumers not being told their options, difficulty accessing hardship support and lenders not having sufficient processes to identify when harm is being caused.”

The report reveals significant variation in the cost of car loans for consumers, with some lenders charging people on lower incomes higher fees. The report also uncovers the systemic pressuring of consumers to certain loan products, with staff trained to override consumer objections to certain types of finance or paying cash.

Disturbingly, the report demonstrates that lenders inflate the true value of cars for the purpose of loans – which contributes to significant consumer harm, including entrenched debt for some consumers when the car is repossessed. In a review of over 250 loans where a car had been repossessed, in nearly 90% of those cases, consumers still owed over half the original price of the loan.

“Consumer advocates want the findings of the report to lead to real world change for consumers, particularly for First Nations consumers, who are involved in many complaints to ASIC related to car loans, and whose poor experiences of car loans are seen from frontline services across the country.

“First Nations consumers are disproportionately being sold faulty cars, with many also experiencing the high-pressure sales tactics and astronomical fees outlined in this report, resulting in them being signed up to unaffordable or unsuitable loans and a car that doesn’t even work. I commend ASIC on its work shining a light on these entrenched and systemic issues and hope this is a wake-up call to all lenders to consider their obligations and responsibilities to protect consumers from harm” Consumer Action Law Centre’s First Nations Policy and Project Manager, Shelley Hartle said.

“We urge government to genuinely engage with and listen openly to the experiences of First Nations people that live in Victoria who have been sold faulty cars or signed up to unaffordable car finance, which we will amplify through the No More Gammin Cars project”.

Quote attributable to Aaron David, CEO, Indigenous Consumer Assistance Network (ICAN):

“We strongly welcome the release of ASIC’s comprehensive investigation into an industry that ICAN has repeatedly raised concerns about. ASIC’s findings reflect what our financial counsellors see every day: consumers placed in unaffordable car loans, facing high costs with limited access to hardship relief and ongoing debt well after the vehicle has been repossessed.  The impact of these lending practices is especially felt by people in regional and remote Queensland, where access to a car isn’t optional, its essential for staying connected to work, family and culture. But too often the financial products available to buy cars are structured in ways that set people up to fail.     

“Where misconduct or breaches are identified, there must be meaningful remediation for affected consumers. Accountability can’t stop at identifying harm, it must include fixing it and ensuring these practices don’t continue.”

Quote attributable to Mark Holden, Acting Director, Mob Strong Debt Help:

“The report’s recommendation to implement better governance frameworks to ensure adequate oversight of intermediary brokers and dealers is urgent. It is very concerning that lenders are not exercising proper oversight over these dealers and brokers setting mob up for lemon cars through overpriced and unaffordable loans. Lenders are not conducting enough due diligence to detect and avoid dodgy dealers and brokers.”

Quote attributable to Roberta Grealish, Principal Solicitor, Consumer Credit Legal Service WA:

“The results of Report 832 are not surprising to the solicitors at CCLS. The high costs and indicators of harm identified in ASIC’s review including early and recurring defaults, reflect the matters presenting on our front line every day. 

“Lemon cars are consistently the most prevalent issue on our telephone advice line. They are frequently coupled with unaffordable car loans resulting in many vulnerable consumers being obligated to keep making large repayments for a car that may not even be useable. Concerning also are the report’s finding of inflated values and LVR from 97% to 127% that, when coupled with distributor fees, establishment costs and high interest rates, are lumbering consumers with residual debt following repossession and sale of the car. 

“The predominant use of brokers and exempted dealers highlighted in the report further highlights the need for greater oversight of these loan distribution channels.  Brokers and car dealers who have direct contact with vulnerable consumers are uniquely placed to help or hinder financial harms. A dealership may engage in high pressure sales tactics to upsell a consumer an unsuitable or unaffordable car and, in reliance on a ‘point of sale exemption’, can assist a consumer obtain finance without culpability. They get paid, and then it is up to the consumer to pursue a responsible lending complaint against the lender. We support targeted action to address high pressure sales and prevent predatory credit practices, including abolishing the point-of-sale exemption.”

Quote attributable to Alan Gray, Managing Director, Bush Money Mob:

“Dodgy car finance – combined with dodgy car yards and debt collectors – are the three ‘Horsemen of the Apocalypse’ for the financial lives of remote Aboriginal people.  Whether it’s in Arnhem Land, the Kimberley or the Pilbara, Bush Money Mob keeps seeing these horrors as the worst of all consumer ripoff”

Quote attributable to Erin Turner, CEO, Consumer Policy Research Centre:

“For many Australians a car is a necessity, not a luxury or a nice-to-have. It is essential for many to get to work, access healthcare, get kids to school and caring or connecting with family. This is why it is so important that car finance is fair and doesn’t come with excessive interest and unfair penalty fees.”

Quote attributable to Ameena Rahimi, Principal Lawyer, Care Consumer Law:

“The findings of the report are deeply concerning, but they are not unexpected. They reflect the growing pattern of enquiries we receive from clients experiencing financial hardship, confusion and distress after entering into car loan arrangements, often with limited practical ability to exit those arrangements once problems arise.”

Quote attributable to My Money Program Team, Shelter Housing Action Cairns

“First Nations single mothers make up 80 percent of the financial hardship negotiations we run on car finance with creditors and debt collectors. These are women living on Centrelink income, often juggling other vulnerabilities on top of that. The loans get approved anyway, on affordability assessments that are either wrong or never properly done in the first place, whilst lenders load the highest application and ongoing fees the contract allows. High repayments. High interest. Within months, the loan eats whatever income was left.

 “By the time these families reach us, the damage is already done. We’ve seen children and their mothers pushed into homelessness or sitting right on the edge of it. Some are still in unsafe DFV situations because a car repayment they can’t afford is draining money that should be going toward rent, or food, or getting out.”

Quote attributable to Steve Grace, Director, LawRight

“While a car is an essential lifeline for many Queenslander’s facing homelessness and housing insecurity, high-cost loans can compound existing financial hardship. LawRight’s Homelessness Law welcomes the release of ‘Lifting the bonnet: ASIC’s review of car loans,’ which confirms our frontline experience supporting people burdened by unaffordable loans.”

Quote attributable to Craig Kelly, CEO, AnglicareNT

“For years, people from across the Northern Territory have raised concerns with our financial counsellors about lending practices and the quality of second-hand vehicles. Stronger regulation will help ensure people get what they pay for and are better protected from inequitable lending.”

SUPPORTING ORGANISATIONS 

• Victorian Aboriginal Legal Service
• CHOICE
• Hume Riverina Legal Service

ENDS

Media contact: Mark Pearce, mark@consumeraction.org.au Tel: 0413 299 567