FAQ

This is a specialist category of finance that is available through a select range of financiers. All applications are reviewed, assessed and addressed on an individual basis and considered on the merits of the applicant. Special conditions may be applied to loans and these will vary depending on the particulars of the application and the requirements of the individual lender.

Conditions may include placing a limit on the total amount of the credit so the applicant would need to reduce the percentage of the purchase price being requested; additional security being offered against the lending amount; and a higher interest rate than is offered to other applicants. Any conditions would be discussed at the point of application so the borrower can assess the overall offer in its entirety.

Major banks and many finance companies operate under strict guidelines around consumer lending and rarely offer this type of finance. Applicants would need to source specialist lenders that do extend this type of credit. These are usually found in the non-bank lending sector. Non-bank lenders are finance provider that operates across many lending markets but does not have the official banking status which means essentially they do not hold deposits. Non-bank lenders can offer a wide range of financial products and due to the nature of their structure, can be more flexible in extending this type of lending. Some of these lenders operate only on an industry-to-industry basis. That means they do not work directly with consumers but through brokers and broker-style lenders. Using the services of such companies can be of particular benefit to applicants with credit issues.

Yes. Both secured and unsecured personal lending include the option for the borrower to make extra payments in addition to the scheduled monthly repayments. When establishing the financial process, a schedule of equal monthly repayments will be established over the fixed period. Borrowers then have the choice to make additional payments if desired. As interest on consumer finance is calculated on a daily basis, the borrower would realise a benefit from a saving on the interest charged. If making extra payments the monies cannot be withdrawn but can be used against future repayments. By making extra payments the amount would be paid out prior to the scheduled end of the term. For loans with a fixed interest rate, paying out the amount early attracts break fees which can be minimal. For lending with a variable interest rate no break fees usually apply for financials paid out early.

All categories of applicants can apply for lending using the same application process. The applicant can complete an online application form or complete the process by phone with their selected lender or broker. The applicant must be over 18 years of age, have employment or other income and provide a range of information around their financial situation, employment and residential history and furnish a number of documents to verify the information. Each application an individual makes for credit is reported to credit reporting agencies and entered on the individual’s credit history. Multiple applications for the same financial product can reflect negatively on the credit score. Using the services of a lender with multiple connections to access finance on behalf of the individual circumvents these negative impacts.

For individuals purchasing a vehicle for their personal private leisure use, the financing products available are the secured and unsecured loans. Secured lending is the most widely used and follows a basic format where the goods are used as security by the lender against the credit being extended. The borrower repays in equal monthly payments over a fixed time period. This product is suitable for all types of personal loan applicants. Where the goods are not considered suitable or acceptable security by the lender, unsecured lending can be applied for. As no security is offered for this type of finance the interest rate is typically higher than for secured financing.

All loan applications are assessed by lenders on an individual basis and determined by the specific details of each application. In general terms, many borrowers can include the total purchase price in their lending with no absolute ceiling in the sector. The most highly-priced models can be financed. But lenders assess individual applications based on an assessment of the ability to furnish that level of debt. A higher-priced item will incur larger monthly repayments than a lower priced item. The lender’s assessment will be impacted by credit history issues. A lender may reject a financial application for the total amount being applied for and in these circumstances request the borrower to reduce the overall amount. This may be done by the applicant paying a deposit to the seller.

Interest rates on lending are established by lenders based on a number of factors starting with the official cash rate which is set by the RBA. Individual lenders then assess their exposure to a certain market sector and/or interest in lending to that sector in deriving the interest rate they will offer for lending in that area. Those interest rates which are advertised by lenders are typically the best rates achievable by applicants with good credit. When assessing individual applications, lenders will assess the risk associated with an applicant which is their assessment of the prospects that the loan will be repaid in accordance with the repayment schedule. Applicants with credit issues would be assessed as a greater risk than those with good credit and it can be assumed that a higher interest rate would be applied to those loans. As each application is assessed individually, applicants would need to request a quote to source a confirmed interest rate on their particular financial application.

As a standard part of the loan application assessment process, lenders will review the applicant’s credit profile. A credit profile includes a credit score or rating and lenders use this as a major determining factor in extending credit for all purposes. A credit score is based on the information in a credit report. This information is an individual’s history of applying for loans and credit as well as repayments, defaults and debts of a range of accounts, bills and loans. These reports are held by a number of credit reporting agencies. Individuals are entitled to free access to a copy of their credit report and score every 3 months. There is a set procedure for fixing any issues which a credit report. This can be due to out of date entries or errors. Before applying for lending it can be useful for an individual to address any issues with the credit report to enhance their prospects of a better deal.