Class Action Alleges Toyota Finance Sold ‘Junk’ Insurance

Class Action Alleges Toyota Finance Sold ‘Junk’ Insurance

A class-action lawsuit has been filed against Toyota Financial Services over allegations it added thousands of dollars of "worthless" insurance policies to new-car finance deals.

It’s alleged Toyota’s finance arm added Payment Protection Insurance, Finance Gap Insurance, and Extended Warranty Insurance to vehicle loans – with some customers allegedly being told they were required to purchase the insurance products.

Echo Law is leading the latest class action, and is the same firm that filed a lawsuit against Toyota in early 2024 for allegedly providing ‘flex commissions’ to dealers by allowing them to set interest rates on car loans – supposedly in breach of financial regulations.

It’s understood the Supreme Court has determined both class actions be managed together.

“We had no idea we had been sold this insurance. If it had been brought to our attention, we never would have signed the contract because I know extended warranties are useless,” said Kingsley Smith, who purchased a vehicle from a Toyota dealership in 2018 with his partner, Jessika.

The couple claim they only recently discovered the Toyota extended warranty as part of their car loan, which added $1445 to the finance.

“I thought we’d been treated fairly. Toyota is a well-known, trusted brand – we didn’t think they’d engage in this type of dodgy conduct,” Mr Smith said in a written statement provided to CarSauce.

“We’re a working-class family, and like so many others, every dollar counts. It’s not okay that they’ve taken advantage of us, and so many other Australians, while lining their own pockets.”

As part of a review conducted by the Australian Securities and Investments Commission (ASIC) in September 2016, it was found that many insurance policies provided negative value – where the premium paid by the consumer is higher than the payout for a successful claim.

However, according to Alex Blennerhassett, Principal Lawyer at Echo Law, many customers were ineligible to claim on their policies – despite paying thousands in premiums.

“In other cases, consumers were never told the insurance policies had been added to their car loan, or were told it was a requirement that they purchase the insurance,” Ms Blennerhassett said.

“We expect there to be a significant number of persons who are group members in both proceedings and are urging those who think they might have been sold junk insurance by Toyota Finance to check their loan documentation and register their interest in the class actions.”

CarSauce reached out to Toyota Finance, and a spokesperson provided the following statement: "Toyota Finance Australia Limited can confirm it is defending the class action proceedings commenced by Echo Law. As the matter is before the Court, it is not appropriate to make any further comment."

Are you interested in a
Toyota
new car
and looking for the best price?

FAQ

keyboard_arrow_down

keyboard_arrow_down

keyboard_arrow_down

keyboard_arrow_down

keyboard_arrow_down

keyboard_arrow_down

Find your perfect car with ease – click for a free, seamless journey with CarSauce and Motor Scout!
Ben Zachariah
Ben Zachariah is a seasoned writer and motoring journalist from Melbourne, having worked in the automotive industry for more than two decades. Ben began writing professionally more than 15 years ago and has written for Drive.com.au, Wheels, MOTOR, 4X4 Australia, Street Machine and CarSales.com.au. He has also freelanced for watch enthusiast website Time+Tide and US defence website Task & Purpose. He completed his MBA in Finance in early 2021 and is considered an expert on classic car investment.
Read more

Other

Toyota

News

First Performance Hybrid LandCruiser is coming to Australia in 2026

First Performance Hybrid LandCruiser is coming to Australia in 2026

The flagship LandCruiser gains hybrid power for the first time ever and is coming to Australia.
Jack MacKenzie
Jun 13, 2025 11:33 AM
All-New Toyota Celica All But Confirmed

All-New Toyota Celica All But Confirmed

There’s a new Celica in development, with some cars already driving on the road.
Ben Zachariah
Jun 4, 2025 5:16 PM
Australia’s Top 10 Best-Selling Vehicles of May 2025

Australia’s Top 10 Best-Selling Vehicles of May 2025

Despite ending production, buyers are rushing to get the current-generation HiLux, while Tesla has returned to the Top 10.
Ben Zachariah
Jun 4, 2025 10:50 AM

Other car news

2026 Kia Tasman Dual Cab Ute Drive Away Pricing Confirmed

2026 Kia Tasman Dual Cab Ute Drive Away Pricing Confirmed

Australian prices for the 2026 Kia Tasman Dual Cab Pick-up confirmed to start at $46,490 Drive-Away ahead of its arrival in July.
Jack MacKenzie
Jun 19, 2025 9:52 AM
2025 MG QS Seven-Seat SUV Arrives in Australia from $46,990 Driveaway

2025 MG QS Seven-Seat SUV Arrives in Australia from $46,990 Driveaway

MG launches its first seven-seat SUV, the QS, in Australia with turbo power, FWD and AWD variants, and a 10-year warranty.
Jacob Brooke
Jun 18, 2025 2:20 PM
Nissan Plans Sale of Renault Shares Amid Financial Difficulty

Nissan Plans Sale of Renault Shares Amid Financial Difficulty

Selling five per cent of its Renault sales could free up around $1 Billion AUD to be put towards Nissan's vehicle development.
Jack MacKenzie
Jun 17, 2025 5:04 PM

Sign up to our newsletter

Be the first to know when we drop new car reviews.

By clicking Sign Up you're confirming that you agree with our Terms and Conditions.
Thank you! Welcome to the Car Sauce community!
Oops! Something went wrong while submitting the form.
© 2024 Car Sauce. All right reserved.
Privacy Policy
Cookie Policy
Terms and Conditions