ANZ Reviewing Its Car Loan Business And May Exit The Space Entirely

Post by Sharat on May 21, 2018 · Under loans · Comments Off on ANZ Reviewing Its Car Loan Business And May Exit The Space Entirely 

At the end of last month Australian banking major ANZ suspended making retail asset-based loans as it seeks to determine whether the rising costs of this type of lending is worth the return the bank makes. This means people looking to borrow to finance the purchase a car, boat or caravan will be fresh out of luck, though ANZ will continue to make personal loans. ANZ expects the review to be complete by the end of September and adds that existing borrowers will not be affected by its decision.

ANZ will still make corporate asset loans

An ANZ spokesperson says that the lender remains committed to providing asset-based finance solutions for companies and the bank will continue servicing existing retail customers for the duration of their loans. The key focus of ANZ’s review will be its car loans business because that business generates less than 1 per cent of the lenders revenue. The spokesperson says the bank wants to determine whether it is better for customers, shareholders and employees if it focused its investments in core business areas instead.

Technology costs prohibitive

ANZ’s decision follows hot on the heels of CBA who was required to cease selling so called “junk” insurance and refund credit card and personal loan customers. NAB also cited technological disadvantage as being a reason that it was not able to stay competitive in the personal asset-based finance space. The lender says that the cost of technology required to compete effectively in the secured consumer asset lending space is significant and as a result it has decided to suspend making new loans while a detailed review of the business is undertaken.

ANZ will continue to make personal loans

If you still have your heart set on a new set of wheels, you can take comfort in the fact that ANZ will continue to make personal loans which consumers can use to fund the purchase of a car. The obvious disadvantage with that however is the borrower will need to pay a higher rate of interest than they would have had they taken out a car loan.

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