The Australian wing of the German automaker approved loans to people without disposable earning
BMW Australia seems to be in major trouble for its irresponsible financing practice. A report by consultants Ernst & Young has revealed that, the Australian wing of the German luxury auto manufacturer has been giving loans to people who have no disposable income to pay back.
The study shows, BMW Australia have been underestimating the monthly living expenses of the people. While approving loans for purchasing the luxury cars from BMW, the company even approved loan for those, who can’t pay back the loan by any means. The report clearly, states, these loans were sanctioned to sell the cars aggressively, without judging the buyer’s real life ability to purchase the car.
As an instance, the company sanctioned a loan of $27,000 for a single mother with 10 children. The lady just has a casual employment and has no disposable earning. In another instance, BMW Australia approved a loan of $50,000 to a 76 year old man. This amount even came double than the value of the car. Similarly this man is found without any disposable income.
BMW Australia gives the dealers a $375 commission on a loan with $5.495 interest rate. While the dealers get an amount of $8,163 as commission for a loan with 12.29% interest rate. Therefore, it is clear, the BMW Australia dealers recklessly approved car loans to get the commission. The German auto manufacturer has started an internal probe and issued a statement.
The Australian Securities and Investments Commission requested the investigation, which was carried out by Ernst and Young. A total of four reports have been made, and the informations have been leaked from just one report. Immediately after the information leaked, BMW Australia Finance issued a statement saying, it is working to update the processes to meet the norms and regulations further.