Study: Car finance regrets soar
New research reveals younger Aussies are most vulnerable to signing up for unsuitable car finance dealsThe News
More than one in four Australians believe they chose the wrong car loan when purchasing their latest vehicle, with younger borrowers more likely to regret rushing into unsuitable finance arrangements, according to new research.
The Key Details
- 28 per cent of Aussies say they chose an unsuitable car loan
- Gen Z borrowers recorded the highest regret rate at 54 per cent
- Almost half trusted a salesperson to choose the loan for them
- Many also failed to compare lenders before signing a deal
- ASIC is currently reviewing Australia’s car finance sector
The Finer Details
The nationwide survey conducted by financial comparison site Money.com.au found 28 per cent of Australians who financed their latest vehicle believe they ended up with an unsuitable loan for their circumstances.
Of those with regrets, 47 per cent said they trusted the salesperson to select the finance product on their behalf, while 35 per cent admitted to comparing lenders before signing up and 23 per cent said loan fees and terms were not clearly explained by the lender or dealership.
Meantime, almost a fifth (19%) said they felt rushed through the finance process, while 13 per cent prioritised securing the vehicle quickly instead of properly assessing the loan details.
Younger Australians were found to be particularly vulnerable to unsuitable finance deals, with Gen Z borrowers recording the highest ‘regret rate’ (54%), ahead of Millennials (29%).
By comparison, only 14 per cent of Gen X and 12 per cent of Baby Boomers reported similar concerns.
The survey also found Gen Z borrowers were the most likely group to rely on dealership staff when selecting finance – with 61 per cent admitting they trusted the salesperson to choose the loan before later regretting the decision – while Gen X borrowers were the most likely to claim loan fees and terms were not properly explained to them.
According to Money.com.au finance expert Sean Callery, the convenience and speed of dealership finance can lead buyers into costly mistakes.
“Car finance is one of the easiest forms of debt to rush into because many buyers are focused on getting the keys rather than fully understanding the total cost of the loan – including fees, interest, the loan term, and whether there’s a balloon payment at the end,” he said.
The findings arrive as the Australian Securities and Investments Commission (ASIC) continues its review of the nation’s car finance sector, following complaints relating to sales tactics, excessive fees and borrower suitability checks.
ASIC has previously found almost half of consumers who defaulted on car finance repayments did so within the first six months of taking out the loan.
Of the repossessed vehicles that were sold, almost 90 per cent of borrowers still owed more than half their original loan balance.
The Road Ahead
ASIC’s review of Australia’s car finance industry is expected to conclude before the end of 2026 and could result in greater scrutiny of dealership-arranged lending practices.
There’s plenty to consider when financing a vehicle, including the period of the loan and your ability to service it (i.e. your income), the lender and much more.
Related: How do I finance my car?
Related: Dealership and/or manufacturer finance
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