Are online lenders safe?
Why should you choose online lending?
Yes, getting an online mortgage from legitimate non-bank lenders is safe. Non-banks are regulated just like any other financial institution. The Australian Securities and Investments Commission (ASIC) regulates non-bank lenders, and loan products from these financial organisations are also regulated by the Consumer Credit Code.
At loans.com.au, we work hard to ensure that we’re compliant with all regulations published by the ASIC and Australian Financial Complaints Authority (AFCA). We follow a strict assessment and verification process for loan applications. Loans are only approved if the borrower meets credit assessment requirements and loan suitability criteria.
If you’re still unsure about non-bank lenders, here’s a quick overview of what they are and what they can offer.
What exactly is a non-bank?
A non-bank is a financial institution that does not have an authorised deposit-taking institution licence (ADI) and is therefore not eligible to offer deposit accounts, such as term deposits and savings accounts. This means they are still able to offer loan products like home loans and car loans, while some can still offer products like credit cards.
Due to the global financial crisis, there aren't as many non-banks around, as the crisis restricted many non-banks' access to funding. But there are still plenty of non-bank lenders out there to rival the major banks, including loans.com.au, which can offer competitive rates on lending products.
What products can you get with non-banks?
This varies from lender to lender, with some having a wider range than others. At loans.com.au, we offer the following loan products:
- Basic and full-featured home loans (home loans with offset accounts and redraw facilities)
- Variable rate and fixed-rate home loans, as well as split home loan options
- Owner-occupier and investment home loans
- Construction loans
- Car loans (new and used)
- Caravan loans
- SMSF commercial property loans
- Home loan refinance
- Bridging home loans
In some cases, non-bank lenders offer loan products not usually found in standard banks like SMSF commercial property loans. If you have a specific loan in mind, exploring non-bank lenders could help you find what you’re looking for.
What are the advantages of choosing a non-bank lender?
Here are a few advantages of choosing a non-bank for your lending needs as opposed to a big bank or mutual bank:
They can offer competitive rates
Non-banks don't have the same corporate structure and number of branches that retail banks (and a number of mutual banks) do, which means they're often able to turn these savings into lower rates on their loan products.
Several of the lower home loan rates on the market, for example, belong to non-bank lenders or their related companies. Non-bank products may also have lower fees on their products compared to retail banks.
This doesn't necessarily apply to every non-bank, so just make sure you compare the rates and fees of non-banks to other products.
They can be more flexible with greater personal service
The big banks have millions of customers across the country - smaller institutions like non-banks don't and therefore may be able to offer more personalised customer service. Lenders such as loans.com.au give you a good chance of speaking to an actual person either online or over the phone, which can make your application process much easier and faster.
They could pass on more savings
Online lenders usually have lower overhead costs because they don’t have physical branches and other associated costs of a brick-and-mortar. At loans.com.au, we use those savings and pass them on to customers in the form of competitive interest rates and lower to no ongoing fees.
Are there any reasons not to use a non-bank?
There are reasons to not use all sorts of institutions, and non-banks are no exception. While they can offer better rates, some non-banks can have more restrictive lending criteria.
Being smaller than larger banks means they might not have physical branches, which some people prefer, and most of them don't offer products like savings accounts or term deposits.
Whether you choose to go with a non-bank, a mutual bank or a retail bank, it's crucial to compare a variety of products based on:
- Their fees and rates
- The criteria for application (will you get approved?)
- The customer service offered
- How good their online banking is or whether they have branches
- If they have the type of product and features you're looking for
Want to learn more about non-bank lenders?
Get in touch with loans.com.au today to learn more about what online, non-bank lenders can offer. Call 13 10 90 or check out our range of home loan and car loan options.
Find out in under 2 minutes if you qualify for one of our home loans.
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About the article
As Australia's leading online lender, loans.com.au has been helping people into their dream homes and cars for more than 10 years. Our content is written and reviewed by experienced financial experts. The information we provide is general in nature and does not take into account your personal objectives or needs. If you'd like to chat to one of our lending specialists about a home or car loan, contact us on Live Chat or by calling 13 10 90.
