More than a million Aussies may have been ripped off under a now-banned scheme that allowed car dealers to set extortionate interest rates on car loans.

Nicole Karaitiana’s husband was slapped with a nearly 20 per cent interest rate on the purchase of a 2006 Ford Falcon in 2010 from a car dealership.

At the time, her husband was earning $1,000 per fortnight and had to fork out $480 per fortnight to cover the repayments - nearly half his wage.

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The Sydney mum said her husband could “barely afford the payments” so she stepped in and helped cover them.

“There were many times where he couldn’t pay the bill. It was either he eats and pays rent, or pays for the car. I had to basically bear the brunt of it. It was horrible,” Nicole told Yahoo Finance.

Nicole and her husband recently found out the car loan had a “flex commission” paid by the lender to the car dealer. This was common practice in the industry at the time and encouraged dealers to arrange car loans at the highest possible interest rate.

Nicole alleges they could have saved nearly $7,000 - close to 50 per cent of what the car itself cost - if they had paid the average interest rate of 6 per cent.

“It’s not fair that we had to pay that and for them to make a profit isn’t fair on the consumer,” Nicole said.

“We could have paid bills and eaten properly. We could’ve had money for rent … That money could have come massively in handy for lots of things. $7,000 is a lot of money, especially back then.”

What were flex commissions?

Flex commissions allowed car dealers and brokers to set the interest rate on car loans, above a base rate set by the bank or lender. This meant the higher the interest rate, the bigger the commission paid to the car dealer.

“There are millions of people that this has happened to. If you bought a car through a dealership and you bought their finance prior to 2018, then you would have potentially had flex commissions added to your loan,” Carly Woods, founder of remediation organisation GetMyRefund, told Yahoo Finance.

The Australian Securities and Investments Commission banned flex commissions in November 2018, after it found consumers were paying excessive interest rates on their car loans, particularly vulnerable consumers.

Woods, who used to work in the finance and insurance industry - within the automotive industry - said dealers would charge interest rates to customers based on their financial experience, rather than their credit rating or risk of default.