Non-bank lenders are growing in popularity as an alternative to Australia’s major banks.
Below we’ve listed 9 key facts that may give you a little more insight into the positive aspect of non-bank lending.
- Do non-bank lenders in Australia require a credit check?
In Australia, most non-bank lenders still require a credit check to access a loan. But if you suffer from a poor credit rating or have been rejected for a loan in the past because you’re considered a ‘high-risk borrower’—don’t despair. Because non-bank lenders aren’t regulated by the Australian Prudential Regulatory Agency (APRA), the way they assess loan applications is different to traditional banks. Non-bank lenders are more accommodating to people or businesses who maybe don’t tick all the boxes.
- What are the benefits of a non-bank lender?
Non-bank lenders are widely accepted as a legitimate alternative to traditional banks and have even contributed to a more competitive marketplace. Often their terms are more flexible and are assessed on a case-by-case basis by a real person.
- Your application is assessed by a person, not a computer.
This is something we pride ourselves on because we know, no scenario is ever the same. Because we are boutique in size compared to major banks, we have a team to personally assess your application, and approve it based on its merit. With traditional banks, your application will first be assessed by a computer algorithm which can flag issues like a fluctuating credit history, or non-traditional employment, and reject your application based on these factors. We have the opportunity to be a little more flexible in our approach.
- It’s easier for self-employed people to apply.
Self-employed clients can face problems being approved for loans by traditional lenders, because the banks are looking for the security of steady income that comes with having an employer. We can be a great option for self-employed applicants because we are going to take the time to assess your individual circumstances and will tailor a product to suit you.
- Non-bank lending is a growing market.
Non-bank lending is a continuously growing market, which is great for consumers who benefit from the increase in competition.
- Faster loan application turnaround times
Unlike traditional banks which often have large hierarchical structures that can lead to delays (especially if you’re a non-conventional customer whose application requires further documentation) the smaller size of non-bank lenders means that your loan application may have a shorter turnaround time.
- You can apply after being rejected by the bank.
Non-bank lenders are specialist lenders known for helping higher-risk borrowers who have been rejected by the major banks. This is because every time you apply for a loan in Australia and it’s rejected, it can be a red flag on your credit report that traditional banks will look negatively on. Often, you’ll be advised to wait six months before applying for a loan again. However, with a non-bank lender, they’re more likely to take this into account without judgement, meaning you don’t have to have to wait to submit a new application.
- Non-bank lenders are financially secure.
While non-bank lenders are exempt from Australian Prudential Regulatory Agency (APRA) regulations (meaning that they can lend to higher-risk borrowers), they’re still subject to financial industry codes including ASIC, Australian Consumer Law and Privacy Laws. This means that if you can often find a better deal for your circumstances.
- Non-bank lenders often come with lower set-up fees than the Big Banks.
Because they’re not large institutions, and often only offer services online, non-bank lenders tend to have lower overheads than the Big 4 banks. This means that they can pass some of those savings onto consumers through lower set up fees and other administrative costs.