The review examined more than 350,000 loans across eight car finance providers. ASIC found that costs varied widely, with establishment fees, distributor fees and, in some cases, additional charges adding materially to the amount borrowers had to repay. For buyers focused mainly on the advertised interest rate, these fees can be easy to underestimate, particularly when the finance is arranged quickly through a dealership or broker at the point of sale.

For Australian borrowers, the core lesson is simple: compare the total cost of credit, not just the rate. A loan with a higher headline rate may not always be the worst option if another product carries large upfront or ongoing fees. Equally, a loan that looks manageable on a weekly or fortnightly repayment basis may still be expensive over the full term. Before signing, borrowers should compare options, check the comparison rate, ask for a complete fee breakdown and understand what happens if they need to repay early, refinance or seek hardship support.

The findings are especially important for people with limited savings, casual income, thin credit history or previous credit issues. These borrowers may be offered finance at higher rates because lenders consider them higher risk. That does not remove the lender’s obligation to assess whether the loan is suitable and affordable. It also means borrowers should slow down the process and avoid being pressured into accepting finance as part of a car purchase negotiation.

ASIC also highlighted the risks of repossession. If a vehicle is sold for less than the outstanding loan balance, the borrower can be left without a car and still owe money. This is where inflated vehicle prices, large fees and rapid depreciation can combine to create serious financial harm.

Practical steps before taking out car finance include:

• Ask for the full repayment schedule and total amount payable over the loan term.
• Use a repayment calculator to test higher rates, fees and shorter loan terms.
• Check whether the dealer, broker or introducer is being paid a fee for arranging the loan.
• Read hardship, default, repossession and early payout terms before signing.
• Consider whether a cheaper vehicle, larger deposit or delayed purchase would reduce risk.

This story also extends the broader 2026 focus on consumer credit conduct. Whether borrowers are seeking car loans, personal loans or business finance, transparency and affordability should come before speed. A fast approval is only helpful if the loan remains workable after the keys are handed over.