Kicking the Tires: Assess Financial Products Like a Pro in 2025

For generations, ‘kicking the tires’ has been Aussie shorthand for giving something a good once-over before buying. In 2025, it’s not just used car buyers who need to kick the tires—everyone seeking a financial product should be taking a close look under the hood. As lending, investing, and insurance options multiply, so do the risks and rewards. With banks, fintechs, and brokers all vying for your dollar, how do you separate a rock-solid deal from a lemon?

Why ‘Kicking the Tires’ Matters More in 2025

Australia’s financial sector is evolving fast. The rise of digital-only banks, ‘buy now, pay later’ providers, and new investment platforms means more choice—but also more complexity. ASIC’s 2025 regulatory updates have ramped up transparency and consumer protections, but the responsibility to scrutinise products still falls on you. A few reasons why due diligence is critical this year:

• Interest rates remain volatile: After several RBA moves in late 2024 and early 2025, lenders are adjusting rates frequently.

• Product innovation: New hybrid loans, flexible mortgages, and app-based insurances have flooded the market.

• Regulation changes: ASIC’s new Product Design and Distribution Obligations (PDDO) mean providers must design products for specific consumer needs—but mistakes still slip through.

• Cost of living pressure: With inflation still above 3% in 2025, every dollar counts when weighing fees and hidden costs.

What to Look For: The Modern Financial Product Checklist

The days of skimming a product fact sheet are over. Here’s how to kick the tires properly on today’s most common financial products:

1. Loans and Credit

• Variable vs fixed rates: Check how a lender’s rates compare to the market average (currently 6.3% for standard variable home loans).

• Comparison rates: These include fees—always look beyond the headline rate.

• Early repayment penalties: In 2025, many digital lenders have removed these, but traditional banks may still include them.

• Hidden fees: Application, account-keeping, redraw, and late payment fees can add up fast.

2. Investments

• Platform security: ASIC’s new 2025 requirements force platforms to disclose cyber risk controls. Ask for the details.

• Fee transparency: Exchange-traded funds (ETFs) and managed funds now display all-in costs under enhanced disclosure rules. Compare apples with apples.

• Liquidity: Some high-yield investment products can restrict withdrawals or have notice periods. Check the fine print.

• Performance data: Insist on at least five years of historical returns, and beware ‘back-tested’ figures for new products.

3. Insurance

• Coverage exclusions: Recent floods and bushfires have led insurers to quietly change what’s covered in some regions.

• Premium increases: Many providers now use AI-driven risk models that can increase premiums more frequently.

• Claims process: ASIC’s 2025 reforms force insurers to publish average claim settlement times. Use this data to compare providers.

Real-World Example: Avoiding a Lemon Loan

Consider Sarah, a Sydney first-home buyer in early 2025. She spotted a mortgage with a tempting 5.5% variable rate, well below the market. After a deeper look, she noticed a hefty $1,200 annual package fee and a redraw fee on every transaction. By using comparison sites and reading the new, simplified Key Fact Sheets mandated by ASIC, Sarah realised the true cost was higher than two competing loans with less flashy rates. Her diligence saved her thousands over the loan’s life.

2025’s Must-Know Financial Policy Updates

• PDDO expansion: Providers must now review product suitability annually, not just at launch.

• Green product labelling: New rules ensure that ‘green’ loans or funds meet strict environmental standards—no more greenwashing.

• Open banking 2.0: Easier switching and product comparison thanks to improved data sharing between banks and fintechs.

Conclusion: Don’t Just Kick, Inspect Thoroughly

The bottom line? In 2025, Australians have more financial options—and more traps—than ever. By taking the time to properly assess products before signing, you can steer clear of lemons and secure a deal that fits your needs, budget, and long-term goals.