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Increased car importing may force change in credit standards

by Nick Bendel9 minute read

The decline of Australian car manufacturing could make vehicle finance more complicated.

The assistant minister for infrastructure, Jamie Briggs, hosted a meeting at Parliament House this week to discuss the implications that might arise from importing more cars.

FBAA chief executive Peter White, who attended the Canberra meeting, said an increase in importing could lead to more questions about servicing, warranties and insurance.

"If the product is potentially inferior to other product that we have in Australia that's known and quantifiable, that can have a negative effect from a lending point of view," he told The Adviser.


"If you can't insure the car properly, that's going to create a problem from a lending point of view, because if the client winds up with a hardship problem, you're not going to get the same money for it."

Mr White said credit standards would inevitably be reassessed if there was a decline in vehicle quality or support.

Any perceived increase in risk could then lead to a demand for higher deposits, he added.

"It's a very important issue for this industry, because we write a lot of motor finance – it's the second most expensive thing that a person will buy behind their house," he said.

"The amount of cars that are written on credit is phenomenal, so we've got to make sure that we do as much as we can to protect credit standards but also the standard of assets to enable credit to keep flowing."

Mr White said the FBAA was the only industry representative at the meeting.

[Related: Young Australians set to learn more about broking]

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