Personalised Interest Rates when buying a new car from 1st November 2018
November 13, 2018
Personalised Interest Rates
The car buying experience for Australian consumers has significantly changed with personalised interest rates now being offered.
New legislative changes from ASIC from 1st November now means that the lender, and not the car dealer, has the responsibility for determining the interest rates for all car loans.
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.
What does Toyota think of the new automotive finance legislation and personalised interest rates?
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. This will help improve 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. This rate will be primarily on their credit score and also other criteria determined by Toyota Finance.
Mr Chandler said TFS has chosen the personalised rate approach,instead of the alternative rate card approach of some automotive finance lenders. He thinks “ 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. He said “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 the 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.
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.