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Customers Drive Fight to Federal Court Over ‘Rip-off Car Loans'

13 July 2020

Class Actions

Shine Lawyers is launching a class action on behalf of thousands of Australians who were ripped-off by car dealerships offering so-called flex commission loans through a scheme eventually banned by the corporate regulator. 

Class Actions Practice Leader Vicky Antzoulatos said the firm will allege car buyers signed-up to the loans as a result of lenders engaging in conduct that was unfair or dishonest. 

“If you bought a car from a dealership using ‘in-store’ finance for personal use from July 2014 to November 2018, you may have been the victim of a flex car loan rort,” Ms Antzoulatos said. 

“Under the now-banned scheme, dealerships spruiked cars with finance while failing to disclose the interest rate on the loans was arranged with the lender in exchange for commissions. 

“The commissions paid were the difference between the base interest rate and the rate car buyers agreed to, and in many cases, this led to buyers paying exorbitant and unfair loans.” 

Shine Lawyers will allege Westpac and its subsidiaries breached its obligations under the consumer credit legislation to provide services to car lenders fairly and honestly. 

“The bank and its subsidiaries failed to disclose to consumers the true nature of their commission structure with the car dealers and we will allege this was illegal,” Ms Antzoulatos said. 

“Buyers signed up to these rip-off loans while deals were made behind closed doors that were not disclosed, so car dealers and the lenders could piggyback hefty margins above the usual rates. 

“The extent of the damage to car buyers was identified in the Financial Services Royal Commission, which revealed the loans were costing consumers thousands of dollars. 

“In some cases, customers who bought the same car or a vehicle of similar value on the same day were charged between 6.5% and 15.5% interest over and above the base rate. 

“The difference in the commission on the sale of these loans was $315 and $10,823 respectively.” 

The class action is to be filed in the Federal Court in the coming weeks and is open to car buyers who took out a loan for personal use through their car dealer with the following banks or finance companies between July 2014 and November 2018: 

  • Westpac; 

  • St George; 

  • Bank of Melbourne; or 

  • Capital Finance Australia Limited. 

“Class Actions such as these, enables Australians to take action to protect their legal rights and to stop corporate wrongdoing,” Ms Antzoulatos said. Customers Drive Fight to Federal Court Over ‘Rip-off Car Loans’

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