ANZ to scrap car loans and consumer finance loans in April
At the end of April, ANZ will suspend its retail asset loans while it determines whether the rising cost of issuing the loans is worth the minor return the bank receives.
The bank believes that its review will be completed by September 30 and has confirmed that current asset finance loan customers will not be affected by the suspension.
“Providing asset finance solutions for commercial customers remains a core business for ANZ and we will also continue to service existing retail customers for the duration of their loans,” said ANZ Retail Distribution Managing Director, Catriona Noble.
The push to review the loans coincides with the ANZ fronting Royal Commission, which are currently looking into financial services across a range of products, including home and car loans, credit cards and add-on insurance.
Car loans is said to be the key focus of the review for ANZ, as the consumer finance products only “represent less than 1% of revenue” within the business.
“We need to assess if it is better for our customers, shareholders and employees if we focus our investment on areas of our business that are core to what we do," Noble explained in a recent statement.
The move by ANZ also comes a week after CommBank was forced to scrap “junk” insurance and refund affected personal loan and credit card customers.
“Given the increased technology costs required to effectively compete in the secured consumer asset finance market, we have decided to suspend all new loans while we conduct a detailed review of the business.”
Aussies who are after a new set of wheels can still take out a personal loan with ANZ to fund a car purchase, but will face a higher rate than the average car loan which, according to the Mozo database, is 7.33%. And if you’re currently scratching your head, wondering what the difference is between the two loans, we’ve jotted down some of the key differences:
- Functionality - One of the big differences is that a personal loan can be used to fund a range of purposes, like renovations, a holiday and a car purchase whereas a car loan can only be used to purchase a motor vehicle.
- Riskiness - Secured car loans appear less riskier to lenders. If a borrower defaults on their loan, the lender can repossess the vehicle. With a personal loan, the borrower can opt for an unsecured personal loan, meaning that a lender would only come after the borrower in the case of loan default.
- Lending criteria - Meeting the lending criteria for a secured car loan may be simpler, as the lender will be using the vehicle as security.
Ready to start your engines and begin your search for the perfect car loan? Then head over to our car loan comparison tool!