BMW Australia to pay back $72 million to 15,000 customers they misled
19 replies, posted
[url]http://www.theage.com.au/business/bmw-forced-to-pay-back-72-million-to-people-it-misled-20161205-gt4ge3.html[/url]
[quote]Prestige carmaker BMW will pay back $72 million to ordinary Australian car buyers who were misled into believing they could afford one of the luxury German vehicles.
The massive consumer pay-back – perhaps Australia's largest ever – will also see the Munich-based company's finance arm paying $5 million into a "community benefit fund" to help educate people about financial literacy.
Fairfax Media can reveal that BMW Australia Finance has signed an enforceable undertaking with the corporate regulator to repay the money after we revealed in August that the company was giving big loans to people with zero or even negative disposable incomes.[/quote]
[quote]A scathing review found that, while the company's most reckless salesmen were rewarded with bonuses, BMW had given a loan of $27,000 to a single mother of 10 children even though she was in casual employment and had negative disposable income.[/quote]
[quote]It gave $23,300 to a refugee aged 21 who had been employed for just one month and whose income was overstated. And it granted a loan of nearly $50,000 to a 76-year-old man based on earning projections rather than the man's real income. The loan was almost twice the value of the car.[/quote]
Explains how many people can afford BMWs. It's both the fault of BMW Australia for unconscionable behaviour, and of those consumers who were absolute morons and either needed to study up on finance or actually put other priorities in front of financing a car.
Now you can afford a better car, win win.
[t]https://i.ytimg.com/vi/BrmHxV9XviU/maxresdefault.jpg[/t]
[QUOTE=Article]ASIC believes that BMW Finance had a "sales-driven culture" that failed to comply with the requirements of the credit laws.[/QUOTE]
[quote=Article]In the vast bulk of these files, the finance company had underestimated people's monthly spending when assessing them for a loan.[/quote]
In what world does this even make financial sense.
[QUOTE=Vlevs;51496512]In what world does this even make financial sense.[/QUOTE]
the world of unethical profits
Not a lesson was learnt.
[QUOTE=FinalHunter;51496758]Not sure how this is BMW's fault. I understand it's pretty ethically shady but the blame should be solely on the people who took out loans that they couldn't possibly pay back. Whether they knew or were too ignorant, it was their fault.
I dunno, I'm sure I'll get shit on for thinking that.[/QUOTE]
Yeah I can't fathom why someone with negative income would get a loan to buy a luxury car. While I disagree with what BMW have done, people should really take control of their finances.
[QUOTE=Ishwoo;51496771]Yeah I can't fathom why someone with negative income would get a loan to buy a luxury car. While I disagree with what BMW have done, people should really take control of their finances.[/QUOTE]
because they put in giant letters "own this for $150" a month and you go "oh, i have that after rent, i can afford a bmw!" it's not hard to get suckered into the world of cheap credit
[QUOTE=FinalHunter;51496758]Not sure how this is BMW's fault. I understand [u]it's pretty ethically shady but the blame should be solely on the people[/U] who took out loans that they couldn't possibly pay back. Whether they knew or were too ignorant, it was their fault.
I dunno, I'm sure I'll get shit on for thinking that.[/QUOTE]
Cognitive dissonance in action. It's amazing to hear this years after bad loans and inflated mortgages caused the previous big financial crisis. It's in part the lender's responsibility to check if the customer has means to repay the loan. If anything, the lender has higher responsibility as they are professionals and have more knowledge of the financing than average consumer. It's absolutely lender's fault if they give trash loans just to get units moving and get markup for financing in the short term.
[QUOTE=FinalHunter;51496758]Not sure how this is BMW's fault. I understand it's pretty ethically shady but the blame should be solely on the people who took out loans that they couldn't possibly pay back. Whether they knew or were too ignorant, it was their fault.
I dunno, I'm sure I'll get shit on for thinking that.[/QUOTE]
It's 100% BMW's fault too - any finance company in Australia has a legal duty not to issue credit or a loan to someone that cannot afford it. If they've done that, as they have, it is considered unconscionable conduct in our law, and can result in massive fines to the company issuing the credit.
[QUOTE=DogGunn;51496968]It's 100% BMW's fault too - any finance company in Australia has a legal duty not to issue credit or a loan to someone that cannot afford it. If they've done that, as they have, it is considered unconscionable conduct in our law, and can result in massive fines to the company issuing the credit.[/QUOTE]
Yeah this isn't just a case of people being stupid about their money, BMW straight-up broke the law.
[QUOTE=FinalHunter;51496758]Not sure how this is BMW's fault. I understand it's pretty ethically shady but the blame should be solely on the people who took out loans that they couldn't possibly pay back. Whether they knew or were too ignorant, it was their fault.
I dunno, I'm sure I'll get shit on for thinking that.[/QUOTE]
Curiously enough, I know of someone who moaned about having a messed up face after a bike accident constantly, saying he had no money to get himself fixed. People even helped him out apparently.
But then, out of the blue, he went and bought an E46 :v:
The hunger for the bimmer and to look like you're a bigshot is so great that people find ways to get one, even if it means they can't really do it. It's just funny in the end.
BMW's really aren't as nice inside or out as their price point would have you think. For the money, I'd much rather go for a Lexus but then again BMW's seem to target rich old people and dumb kids who want to look like a hotshot
[QUOTE=Kylel999;51497423]BMW's really aren't as nice inside or out as their price point would have you think. For the money, I'd much rather go for a Lexus but then again BMW's seem to target rich old people and dumb kids[/QUOTE]
Well, its not that it isn't nice, but its overly expensive.
They really get you in the extras, but that goes for almost all german cars.
For example, you got the VAG group. Audi is the more expensive, then you have VW, then Seat, and then Skoda. They all share platforms with each other, only changing a few things between cars and rebranding, and obviously giving them a different shape. For example, the A3 8L has the exact same dashboard as the Seat Leon, and it was probably way more expensive when it came out too. The VW Up is shared between Seat and Skoda, and yet, the VW version is way more expensive than the Skoda and the Seat. It has a better trim and a few more extras, but its still a bit more.
This means though, that you could opt for a cheaper and in the end, more or less same version of the higher end model. This doesn't happens with BMW though.
Or, if you're lucky enough and live in Australia or wherever you got cars compared to those sweet V8 Holdens, you can get the same ammount of power, just a little bit worser trim, and a fraction of the price of the bimmers.
Even if you want to call the customers stupid for buying cars they couldn't afford, taking advantage of stupid customers through predatory lending is against the law.
[QUOTE=DogGunn;51496968]It's 100% BMW's fault too - any finance company in Australia has a legal duty not to issue credit or a loan to someone that cannot afford it. If they've done that, as they have, it is considered unconscionable conduct in our law, and can result in massive fines to the company issuing the credit.[/QUOTE]
That's amazing. Would love to see that in my country, I can't wrap my head around how dumb people are with money around here.
[QUOTE=polarbear.;51498362]That's amazing. Would love to see that in my country, I can't wrap my head around how dumb people are with money around here.[/QUOTE]
I think this is the case in most developed countries
[QUOTE=Kylel999;51497423]BMW's really aren't as nice inside or out as their price point would have you think. For the money, I'd much rather go for a Lexus but then again BMW's seem to target rich old people and dumb kids who want to look like a hotshot[/QUOTE]
Lexus are disgusting on the inside. Stupid shit like wood grain to make relatively cheap material look good. It's the classic "look this car is made of money" rather than any good looks or practicality.
[editline]9th December 2016[/editline]
[QUOTE=polarbear.;51498362]That's amazing. Would love to see that in my country, I can't wrap my head around how dumb people are with money around here.[/QUOTE]
I think you'll probably find that Canada would have similar laws. Even some US states do.
[QUOTE=FinalHunter;51496758]Not sure how this is BMW's fault. I understand it's pretty ethically shady but the blame should be solely on the people who took out loans that they couldn't possibly pay back. Whether they knew or were too ignorant, it was their fault.
I dunno, I'm sure I'll get shit on for thinking that.[/QUOTE]
I want to say it's horribly scummy and BMW should be punished but uh, I think they should instead just prevent it in the future. I mean what law did BMW even really break?
edit: oh. derp. someone explained it above me. Okay, I change my mind they do deserve this.
[QUOTE=Rocâ„¢;51497443]
Or, if you're lucky enough and live in Australia or wherever you got cars compared to those sweet V8 Holdens, you can get the same ammount of power, just a little bit worser trim, and a fraction of the price of the bimmers.[/QUOTE]
Indeedy. Up here in freedomland you can get a 500HP muscle car for under 2,500. It's not gonna be very pretty and the thing may or may not have an electrical system jury-rigged out of lampcords by BillyBob's half-drunk half-blind step-uncle, but by jove when it is running it will pin you to the seat! Jump up to about 7,500 bucks or so and suddenly the damned thing is reliable on top of being an absolute monster.
....what's the down on a late model M3 again? Pretty sure it's more than that~
[editline]8th December 2016[/editline]
[QUOTE=DogGunn;51498864]Lexus are disgusting on the inside. Stupid shit like wood grain to make relatively cheap material look good. It's the classic "look this car is made of money" rather than any good looks or practicality.
[/QUOTE]
Their slogan should be 'Selling $56,000 Camrys since 1991!'.
[QUOTE=Vlevs;51496512]In what world does this even make financial sense.[/QUOTE]
All of the fellas at the bottom in the finance department - who make the sales - are pressured by the management culture and the incentives from poorly-targeted bonuses to make as many sales as possible. They know that if the entire finance operation stuffs up (just as it did for BMW), the fault would lie at the top of the hierarchy which created and maintained that poor management culture. There was little threat for the people at the bottom to act unconscionably.
It's kind of like how it makes sense for individual businesses to automate as many jobs as possible, but macroeconomically, if every business did just that then nobody would have a job, meaning businesses can't make sales because no one has any money, and the whole system collapses.
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