What is a non-bank lender?

The team at ProLend understand that there’s varying levels of understanding about short term lending and those who provide it, so below we explore the facts and discuss common misconceptions about this offering that plays a vital role in Australia’s lending ecosystem.


What is a non-bank lender?

A non-bank lender is a finance provider that isn’t a bank. Put simply, they are not deposit-taking institutions, and their loans aren’t funded by customer deposits. Instead, loans are funded by pooling together debt and on-selling it to institutional investors.


Are non-bank lenders trustworthy?

Absolutely. Non-banks are perfectly trustworthy home loan providers who help drive competition with the mainstream lenders in Australia’s funding market. They offer borrowers an alternative to a traditional loan, which not only gives people more choices, but provides an option for those who fall out of the big bank’s risk appetite. Like banks, the Australian Securities & Investments Commission (ASIC) regulates non-banks, which means non-banks must comply with the same responsible lending laws that banks do. Did you know? Non-banks make up a significant part of the home loan market, lending billions of dollars to fund Australian home loans each year.

Do non-bank lenders only give loans to people with a bad credit history?

Absolutely not! Non-bank lenders are an option for prime borrowers – those who could go to a traditional lender, tick all the boxes etc. However, non-bank lenders often specialise in providing loans for so called non-conforming borrowers including self-employed people, first time buyers and property investors.

Some borrowers get knocked back simply because they don’t fit the banks usual boxes, like having a credit history, or meeting Lenders Mortgage Insurance (LMI) providers’ criteria.

Are non-bank loans more expensive?

Many things can affect the interest made available for your specific scenario, including market influences, the nature of the loan you’re looking at and credit assessment requirements.

Our team at Prolend individually assess each scenario based on its own merits, with the assessment carried out by a real person who’ll take the time to understand your situation and look to provide loan options and interest rates suited to your individual circumstances.

Are non-bank lenders financially secure?

Non-bank lenders must fully comply with the same consumer credit rules and regulations as any bank does. Applications will only be approved if they satisfy our loan suitability criteria and credit assessment requirements.

Do non-bank lenders have fewer product options than the banks?

If anything, non-bank lenders tend to offer a wider range of products that are suited to different niches. Often their products are more flexible than the banks and are tailored for borrowers who do not fit the traditional lending criteria of the banks.


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