Borrowing money from a car dealer to help pay for that new car is generally not the best way to go.
As CHOICE has previously reported, a personal loan or a home loan redraw is probably a better idea than any finance on offer from the hyper sales-driven car industry.
BMW Finance – which offers loans for a number of vehicle types and brands, including used vehicles – is the latest case in point.
The finance firm also goes by the names of Mini Financial Services and Alphera Financial Services.
Following an ASIC investigation that found the firm had violated responsible lending laws between January 2011 and August 2016, BMW Finance has agreed to take part in a $72 million credit remediation program – the largest on record in Australia.
The program will benefit about 15,000 BMW Finance customers who ASIC says "may have suffered hardship as a result of BMW Finance's compliance failures".
Here's how the program breaks down:
- $14.6 million in remediation payments
- $7.6 million in interest rate reductions on current contracts
- $50 million in loan write-offs
BMW Finance will also be ponying up $5 million to help prevent consumers from getting stuck in bad car loans in the first place. The money will go toward consumer advocacy and financial literary initiatives.
"BMW Finance had a sales-driven culture that failed to comply with the requirements of the credit laws and resulted in poor outcomes for many consumers. We are encouraged that BMW Finance has recognised these shortcomings and agreed to a remediation program that will see thousands of consumers compensated," says ASIC deputy chairman Peter Kell.
BMW Finance's practices, he added, stand as "an example of the staggering cost of poor business practices and should act as a warning to other car financiers to get their houses in order".
How to get compensated
If you were a customer of BMW Finance between January 2011 and August 2016 and believe you have suffered unreasonable hardship as result of the terms and conditions of the loan, you can get in touch via the following contacts:
- 1800 448 225 from 08.00 to 17.00, Monday to Friday (excluding public holidays)
- BMW: CustomerFirstAUS@bmwfinance.com.au
- Alphera: CustomerFirstAUS@alphera.com.au
- MINI: CustomerFirstAUS@minifinance.com.au