Wet Loans in Australia 2025: What Borrowers Need to Know

With Australia’s finance sector continuing to evolve in 2025, more borrowers are encountering the term “wet loan” when shopping for cars, trucks, or heavy machinery. But what exactly is a wet loan, and why should you care?

What Is a Wet Loan?

A wet loan is a type of finance arrangement where the loan documentation is signed before all the details—like the vehicle identification number (VIN) or serial numbers—are finalised. This approach is most common in car dealerships and equipment financing, where speed and convenience are often prioritised.

Unlike a “dry loan,” which only funds after every detail is confirmed, a wet loan is processed on the spot, sometimes even before the asset is delivered or its specifics are locked in. The term “wet” comes from the idea that the ink on your signature is still wet when the lender approves the funds.

• Example: You visit a dealership, pick out a new ute, and sign the finance papers that same day—even though the dealer hasn’t yet provided the VIN or registration details to the lender. The loan is approved and ready to go as soon as you drive away.

Why Wet Loans Are Popular in 2025

Speed and flexibility are the primary reasons wet loans are gaining traction in Australia. With strong competition among lenders and digital platforms streamlining approvals, many dealerships and finance brokers now offer “instant” loan options.

• Faster turnaround: Borrowers can take possession of vehicles or equipment immediately, which is especially attractive for tradies and businesses needing to get on the road fast.
• Digital documentation: Electronic signing and online loan portals mean paperwork is completed in minutes, not days.
• Dealer incentives: Some car dealers and equipment suppliers offer better deals or extras (like discounted insurance) for signing wet loan agreements on the spot.

According to recent data from the Australian Finance Industry Association, over 40% of dealer-arranged car loans in early 2025 were processed as wet loans—a significant jump from previous years.

Risks, Compliance, and What to Watch Out For

While wet loans can be convenient, they carry some unique risks. Borrowers must be especially vigilant about compliance and the details in their contract:

• Missing details: Signing before all information is confirmed (like VIN or asset condition) can leave you exposed if the final product isn’t what you expected.
• Cooling-off confusion: Depending on the lender and state laws, cooling-off periods may be limited or unavailable once you’ve signed a wet loan agreement.
• Fraud and misrepresentation: There have been cases of unscrupulous dealers altering details after the fact, leading to finance disputes or difficulties with registration and insurance.

Regulatory changes in 2025 mean lenders must now clearly disclose when a loan is being processed as a wet loan. The Australian Securities & Investments Commission (ASIC) has updated its guidance, requiring:

• Full written disclosure of any missing asset information at signing
• Confirmation of key details before settlement funds are released
• Mandatory review periods for high-value or commercial loans

For consumers and small business owners, it’s crucial to:

• Double-check all paperwork before signing
• Ask for written confirmation of cooling-off rights
• Follow up with the lender to ensure all asset details are correct post-signing

Is a Wet Loan Right for You?

Wet loans offer speed and convenience, but they’re not for everyone. If you value thoroughness, or if you’re purchasing an asset where details matter (like commercial vehicles or specialised machinery), a dry loan might offer more peace of mind.

• Wet loan is best for: Simple purchases where speed is essential—like new car buyers with a trusted dealer.
• Consider a dry loan if: You want all details locked in before funding, or you’re wary of post-signing changes.

Always compare loan offers, check lender reputations, and don’t hesitate to ask questions about the process. In 2025, digital tools make it easier than ever to get instant quotes and review contracts—but the responsibility still lies with you to ensure you’re not signing away your rights or missing crucial information.