Buying a car with finance becomes more transparent as ASIC introduces new legislation
The car buying experience for Australian consumers changes significantly on November 1 with the introduction by ASIC of a new legislative instrument on all automotive finance lenders.
This legislation change follows several years of investigation into “flex commissions” paid by lenders to car finance introducers and dealers, who have historically set the interest rate on the car loan. From today, these legislative changes mean the lender, not the car dealer has the responsibility for determining the interest rate on a car loan.
President and CEO of Toyota Financial Services (TFS), John Chandler, says the introduction of these changes gives automotive finance lenders a greater ability to offer accurate and customised rates thus improving the customer experience.
“This legislation represents the next step in the evolution of purchasing a vehicle, which we regard as a welcome change,” he said.
Toyota consumers will also benefit from this change. Consumers buying a new or used car within a Toyota dealership will now be offered a personalised interest rate that is based primarily on their credit score and other criteria determined by Toyota Finance.
Mr Chandler said TFS had chosen the personalised rate approach instead of the alternative rate card approach of some automotive finance lenders “as we think the personalised rate approach will be more accurate and will provide our customers with a fairer interest rate as it is based on their individual circumstances, rather than a rate card, which places customers in broad interest rate bands.”
Mr Chandler believes this new more tailored approach will enhance the relationship between the car dealer and the customer significantly, saying “we would like to reach the point where the dealership is seen as the best place to get car finance.”
“We have spent three years developing and refining the Toyota Personalised Rate methodology. Consumers will get a rate that reflects their individual circumstances and they will also have more transparency of their rate within the car buying process,” he said.
The main shift for consumers with this legislation change is that now the interest rate will be primarily determined by their credit score. Research commissioned by TFS has shown that only 26% of Australians know their credit score.
“Financial literacy is important for all Australians. We are working with our industry bodies to develop informative materials to assist our Toyota consumer base to understand automotive finance and how their credit score is calculated,” Mr Chandler said.
As an industry leader, TFS is also extending the personalised rate methodology to commercial business loans as a key means to support small business customers.
“The introduction of this new ASIC legislation is very welcomed and helps the entire industry,” Mr Chandler said.
To learn more about Toyota Personalised Rates, CLICK HERE. Northpoint Toyota's New Car stock listings display detailed information about the payments and financiong for each moedel.
About Toyota Financial Services
Toyota Financial Services (TFS), a division of Toyota Finance Australia Limited, is Australia’s largest vehicle finance corporation with finance and insurance options available across 280 locations around the country. Headquartered in Sydney, Australia, Toyota Financial Services has been operating in Australia for over 30 years.
NOTE: This blog is copied from an original Toyota press release.