Westpac, St George: Banks hit by class action over car loan ‘flex commissions’

Instead, the teachers’ aide, who was 25 at the time, was charged 12.99 per cent on a loan of just over $47,000 – which meant she had to pay a staggering $24,864 in interest for her 2015 Hyundai ix35.

She claims she was only told of the interest rate after the deal was struck.

“They didn’t tell me the interest rate until I went to pick up the car. We bargained hard on the initial price, but I believe they knew what they were doing and slugged me with the high interest rate to compensate,” Ms Fox said.

Ms Fox is now one of the lead applicants in a new class action over shonky bank car loans, which leading law firm Maurice Blackburn today commenced in the Victorian Supreme Court.

The class action alleges that Westpac Banking Corporation and St George Finance Limited colluded with car dealers to sting consumers with unfair high interest loans.Source:Supplied

It alleges that Westpac Banking Corporation and St George Finance Limited colluded with car dealers to sting consumers with unfair high interest loans in Australia’s multi-billion dollar car finance industry.

The claim alleges that borrowers were not told that Westpac and St George had a deal with car dealers that allowed them to hike up the interest rates on car loans from a “base rate” in order to earn substantial “flex commissions”.

“Banks and car dealerships ripped off so many unsuspecting car buyers. I feel they targeted me because I was young and eager to get in to my first new car,” Ms Fox said.

“My advice to other car buyers is shop around and make them explain to you exactly how the loan works and where the money is going.”

Maurice Blackburn estimates hundreds of thousands of motorists could benefit from the class action, and that in some cases, Aussies were charged more than triple the base interest rate set by the banks.

Flex arrangements were a normal feature of the car industry for over 25 years, but it was banned by the Australian Securities and Investments Commission in 2018 and was slammed in the final report of the banking royal commission…