Car Loan Fees Exposed: What ASIC Found in 2026 (And How to Protect Yourself)

If you're planning to finance a car in Australia in 2026, a major new ASIC report should be required reading before you sign anything. In June 2026, the Australian Securities and Investments Commission (ASIC) released Report 832 — "Lifting the Bonnet: ASIC's Review of Car Loans" — after examining more than 350,000 car loans across eight of Australia's largest car finance providers. What they found was confronting: some borrowers were paying establishment fees of up to $9,000 on a single loan, nearly half of those who defaulted did so within the first six months, and 90% of repossessed borrowers still owed more than half their original loan balance after their car was sold. In this guide, our team at Integrated Finance Group breaks down exactly what ASIC found, which fees to watch for, and how to protect yourself before you commit to any car finance arrangement.

What Did ASIC Find When It Reviewed Australian Car Loans in 2026?

ASIC's Report 832 is the most comprehensive review of Australian car finance in years. Covering data from over 350,000 car loans placed between March 2023 and 2025 across eight major providers — including some of the country's largest — the regulator identified three major problem areas: excessive and opaque fees, poor hardship support, and weak lender oversight of third-party distributors like dealerships and aggregators.

On fees, ASIC found that most car loans attracted not one but two establishment fees: a lender establishment fee (ranging from $299 to $995) and a separate distributor establishment fee (ranging from a flat $912 up to $2,500 or more). In the worst cases reviewed, combined fees reached $9,000 on a loan of approximately $49,162 — a cost equal to 18% of the loan amount before a single repayment was made.

On hardship: nearly half (48%) of all borrowers who defaulted did so within their first six months of taking out the loan — a red flag that responsible lending checks may not have been thorough enough at the point of origination. When cars were repossessed and sold, 90% of borrowers in a sample of 250 loans still owed more than half their original loan balance. In some cases, borrowers owed more than 100% of the original loan amount after the vehicle was liquidated — a situation sometimes called "underwater" financing.

ASIC Commissioner Alan Kirkland stated that "some lenders are not paying enough attention to the impact of their practices on consumers," and flagged that further regulatory action could follow.

How Can a Car Loan Establishment Fee Reach $9,000?

It sounds extraordinary, but the structure of car finance in Australia makes it possible. Most consumer car loans and many business asset finance products involve multiple parties — the lender, a distributor (often a car dealership or aggregator), and sometimes a broker. Each party in that chain can charge their own fee, and those fees are typically bundled together and added to the loan principal.

Here is how a fee stack can build up quickly:

Fee Type	Typical Range	Who Charges It
Lender establishment fee	$299 – $995	The finance provider
Distributor / dealer fee	$912 – $2,500+	Car dealership or aggregator
Monthly account-keeping fee	$0 – $20/month (up to $1,200 over 5 years)	The finance provider
PPSR registration fee	$5 – $50	Lender (government charge passed on)
Early repayment fee	$0 – varies	Some fixed-rate lenders

The critical point is that establishment fees are almost always added to your loan principal — meaning you pay interest on them for the entire life of the loan. On a five-year term, even a $2,000 establishment fee can cost you significantly more in real terms once interest is factored in.

What Is the Comparison Rate — and Why Does It Matter More Than the Headline Rate?

The comparison rate is the single most important number to look at when evaluating a car loan. Unlike the advertised interest rate, the comparison rate includes both the base interest rate and most standard fees — including establishment charges and monthly account-keeping fees — expressed as a single annual percentage figure.

Here is why this matters in practice. A lender advertising a car loan at 5.99% per annum might look very competitive. But if that lender charges $2,000 in establishment fees and $15 per month in account-keeping fees on a $30,000 loan, the comparison rate could be well above 8%. That gap — between the headline rate and the comparison rate — is where the real cost difference between loans lives.

ASIC's report found that in some cases, establishment fees were pushing effective loan costs to the point where borrowers were substantially worse off than the advertised rate suggested. As a rule, if the comparison rate is more than 1.5–2 percentage points higher than the headline rate, it's worth asking your broker to explain exactly what fees are driving that gap.

At Integrated Finance Group in Coburg North, we work across more than 30 lenders and are legally required to disclose all fees in writing before you commit. We compare total loan costs — not just headline rates — so you can make a fully informed decision.

What Other Car Finance Fees Are Buried in the Fine Print?

Beyond the fees ASIC flagged, there are several other charges that borrowers frequently overlook. Knowing what to ask for upfront can save you hundreds — or even thousands — over the life of your loan.

• Early repayment / early exit fees: Some fixed-rate car finance products charge a fee if you repay the loan ahead of schedule. This is particularly relevant for business vehicle finance structured as a chattel mortgage or finance lease, where break costs can apply. Always check whether your loan allows flexible extra repayments without penalty.
• Late payment fees: Typically $25–$35 per occurrence, these can compound quickly if you encounter a period of financial difficulty. ASIC's report also found that hardship support was inconsistent across lenders, so knowing your options before you fall behind is critical.
• Balloon payment residual: Many car loans — particularly novated leases and some chattel mortgages — include a balloon (residual) payment due at the end of the term. If you can't refinance or pay this lump sum, you may be forced into a sale. Make sure you understand whether your loan has a balloon and what the figure is before you sign.
• Comprehensive insurance requirements: Most secured car loans require you to maintain comprehensive insurance for the life of the loan. Failure to do so can be a breach of your loan conditions. Factor this ongoing cost into your total vehicle budget.
• Documentation / valuation fees: Some lenders charge fees for processing supporting documents or obtaining a vehicle valuation. These are usually small ($50–$200) but should be disclosed upfront.

For businesses financing vehicles or equipment, there are additional structuring considerations — see our guide on equipment finance for Melbourne SMEs and how to choose the right loan structure for your situation.

How to Protect Yourself When Getting Car Finance in Australia

The good news from ASIC's report is that many of these issues are avoidable when borrowers ask the right questions and deal with regulated, transparent lenders. Here is a practical checklist to use before you sign any car finance agreement.

• Ask for the comparison rate in writing — not just the headline rate. If the lender or dealer cannot provide a comparison rate, that is a red flag.
• Request a full fee schedule — this should include every establishment fee (both lender and distributor), ongoing monthly fees, any PPSR registration charge, and early exit or late payment penalties.
• Ask for the total amount repayable — this is the sum of all repayments over the life of the loan plus any balloon payment. It is the most honest measure of what you will actually pay.
• Check for balloon payments — if your contract includes a residual amount, confirm the dollar figure and understand your options at the end of the term (refinance, pay out, or trade in).
• Verify the lender is ASIC-licensed — all legitimate car finance providers must hold an Australian Credit Licence (ACL). You can check this on the ASIC MoneySmart licence check.
• Don't finance at the dealership without comparing — dealer finance is convenient, but it often carries higher fees and rates than finance arranged independently. Take a pre-approved offer to the dealer and negotiate from a position of strength.
• Read the hardship provisions — your loan contract must include details of your lender's hardship policy. ASIC found these were applied inconsistently; know yours before you need it.

Should You Use a Finance Broker or Go Direct to a Lender for Car Finance?

One of the most important findings in ASIC's Report 832 was the concern about lender oversight of third-party distribution channels — particularly car dealerships and aggregators. ASIC found that all eight lenders reviewed relied primarily on third-party distributors, and that some lenders were not adequately monitoring the outcomes their distributor channels produced for borrowers.

This is where using an ASIC-licensed finance broker — rather than arranging finance through a dealership — provides a meaningful layer of protection. As a credit licensee, a broker is legally required to:

• Disclose all fees and commissions in writing before you commit
• Conduct a genuine assessment of whether the loan is suitable for your circumstances (responsible lending)
• Act in your interests — not in the interests of a single lender or dealership
• Provide you with access to a Credit Guide, which outlines your rights and how to make a complaint

Our team at IFG holds ACL 391237 (BLSSA Pty Ltd), and both Brian (CR 485802) and Frank (CR 486546) are individually licensed credit representatives. When you work with us on car and asset finance, we compare products across our lender panel, disclose all fees and our remuneration in full, and structure the loan to suit your actual budget — whether you're buying a family car, a work ute, or financing equipment for your Melbourne business.

If you're also exploring how vehicle finance sits within a broader business funding strategy, our commercial finance page covers the full picture.

What to Do Before You Apply for Car Finance in 2026

ASIC's findings are a timely reminder that car finance in Australia varies enormously in cost and quality. With establishment fees that can reach $9,000, comparison rates that bear little resemblance to advertised rates, and hardship provisions that may not be applied consistently, doing your homework before you apply is essential.

Here are the three things we recommend doing right now:

1. Get a pre-approval before visiting dealerships. A pre-approval gives you a firm borrowing limit and an agreed rate, so you know exactly what you can spend and aren't relying on dealer finance at the point of sale.
2. Compare the comparison rate, not the headline rate. A loan at 5.99% with $3,000 in fees is more expensive than a loan at 6.5% with no fees. Run the numbers or ask your broker to do it for you.
3. Talk to a regulated broker. A broker who is an ASIC credit licensee is required to act in your interests, disclose all fees, and assess suitability. That obligation doesn't exist when you arrange finance through a car yard.

Want to Know If You're Getting a Fair Deal on Car Finance?

Brian and Frank at IFG compare car and asset finance across more than 30 lenders — and they'll show you the comparison rate, the total cost, and every fee before you commit. No obligation, no cost to you.

Book a free 15-min consultation   or call 0401 333 636

Comparison rate warning: Any comparison rates quoted in this article are based on a secured loan of $30,000 over five years. WARNING: This comparison rate applies only to the example given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate and may affect the cost of the loan.

General information only. This article does not constitute financial or credit advice. Car finance terms, fees, and lender criteria vary significantly by individual circumstances, loan amount, and credit profile. Please speak with a qualified ASIC-licensed finance broker before making any car or asset finance decisions. Integrated Finance Group — BLSSA Pty Ltd ACL 391237. Brian Hermosilla CR 485802 · Frank Marin CR 486546. MFAA Members #716100 & #242075.