Dealer Finance and Responsible Lending: A Practical Guide

Finance can be a valuable part of the dealership process, but it also introduces obligations that should be separated from the vehicle sale. A clear process protects customers, lenders and the dealership’s own record keeping.

Explain the product, not just the repayment

Customers should be given the key terms of a loan or lease in writing. A repayment figure without the term, interest assumptions, fees, deposit and total amount payable does not give a complete picture of the product.

Gather information consistently

The ACCC says dealers and credit providers should make sufficient enquiries and verify a consumer’s financial situation to meet responsible-lending obligations where applicable. Staff should use an approved process and avoid improvising questions or skipping steps because a customer appears keen to proceed.

Separate approval from pressure

The finance process should not turn a customer’s urgency into a reason to obscure terms or add optional products without a clear explanation. Keep the vehicle price, finance product, insurance and warranty discussion distinct enough that the customer can understand each decision.

Keep a clean file

Record the application path, disclosures, documents provided, customer questions, consent and outcome. If a lender declines an application, staff should not make unsupported statements about why or promise that another product will certainly be approved.

Manager review questions

• Are finance terms shown in writing?
• Can staff explain the difference between a loan, lease and optional product?
• Are customer enquiries and verifications recorded?
• Are complaints escalated to a responsible person?
• Can the dealership produce the deal record after delivery?

Rules can vary by product, lender and customer circumstance. This article is general information and not credit, financial or legal advice.