After several very disruptive years in our lives, many people are looking to change-up aspects of their lives. Injecting something new into their world to uplift, motivate, enable the take-up of a new recreational activity and open up new ways to enjoy life. Changes including buying a new car, a boat for leisure and recreation, a caravan to embark on travels and holiday or a new motorcycle for – enthusiasts don’t need a reason for a new ride! Others may be looking to take advantage of the current low interest rate situation to upgrade existing goods. Whatever the purpose, when buying goods for private use with finance, buyers will do well to engage in a thorough process of comparing consumer loans and lenders.
The lending scene in the consumer finance area is quite vast and buyers may be faced with multiple options. Interest rates, loan conditions and other finance details can vary significantly across the market. Those who have not applied for a loan for some time or ever may not be across what to look out for and how to compare the detail. From our extensive and expertise in providing consumer finance, our Jade Finance team has prepared a brief overview of tips for lenders and loans.
Consumer Finance Market
Consumer finance refers to loans made to individuals for goods to be used for private or personal use. This is differentiated from business finance which is for goods being acquired by a business for use in the business. The types of loan products are different – consumer loans v business finance, and the interest rates that apply are also different.
The consumer loan sector is regulated by ASIC with laws and guidelines around the processes and procedures that lenders must follow when offering finance to individuals. Lenders need to be licensed and follow the Responsible Lending Guidelines as established by ASIC. When considering different loans, first check the credentials of the lender to ensure they are licensed.
Some lenders such as banks operate in many sectors – cars, bikes, caravans etc, while others will specialise in a particular area. While many of the loans will be named essentially the same – primarily a Secured Car/Boat/Caravan Loan or Secured Personal Loan, each lender will have their own individual details and guidelines.
In broad terms, the consumer loan market for cars, boats, caravans and motorbikes includes:-
- Banks cover many loan categories and are usually easily-accessed. They operate to laws in accordance with their banking status and most have strict loan guidelines which they adhere to.
- Finance companies are non-bank lenders and they tend to advertise their loans which may give the impression of a cheap option or a quick and easy to work with loan source. Check our Lender Comparison charts and loan calculators to see how cheap our offer may be in comparison.
- Manufacturer and dealer loans is an area which continues to grow. Almost all sellers of say new and used cars has an arrangement with a finance company and offers loans at the dealership. Often these loans are advertised as so much per week to encourage and attract buyers. While many of these may be genuinely good loan offers, some may conceal higher fees or even commissions to the seller. Read the detail and ask about fees and charges and once again, compare repayments by using our calculators.
- Finance brokers operate like Jade Finance. We arrange the entire loan process for our customers to save them time, the fall-out of them sourcing multiple quotes and ensure the cheapest deal is acquired. While banks, finance companies and dealers have access to only one loan source, we are accredited with many lenders. So we have a greater field of options from which to find customers the cheapest loan. We also handle other aspects such as checking PPSR, seller IDs, verifying goods details and other checks.
- Buy Now Pay Later is usually for smaller priced goods but may be offered on some goods which can also be financed by a consumer loan. These loan products can attract high fees and should be looked into closely before signing up for higher priced items.
- Pay day lenders appear a quick and convenient way to get a loan. But interest rates are usually much higher than we can achieve and this type of finance may not be best suited to the purchase of goods such as cars and boats.
Effect of Getting Loads of Quotes
The first thing many individuals will do when embarking on getting a loan is to phone around or check online and get a whole load of quotes. Sounds smart enough as then you could have multiples to compare to get the cheapest.
But there are a few issues to be aware of:-
- In order to get an exact loan quote, completing a full loan application may be required. Any basic over the phone quote may just be an estimate. Lenders should be doing a full credit check and risk assessment.
- All loan applications are reported to credit agencies by lenders. When lenders see multiple requests for the same loan on a credit profile, it can give a negative image and reflect poorly on the credit profile. Requesting a broker-style lender such as Jade to source the best from the rest does not result in the same outcome.
- Do you have the financial acumen to compare the detail in multiple loan quotes? Lenders have varying conditions, fees and charges associated with their loan products and buyers should be in a position to make a well-informed decision. Your Jade consultant assists with these aspects by explaining all the details so you can understand fully what your loan contract entails.
Consumer Loan Interest Rates
Interest rates will vary across lenders and may vary across loan categories – cars, boats, caravans and motorbikes. Consumer lenders must display a Comparison Rate which is a specific rate which is calculated on a specific purchase/loan after fees and charges have been included. This is in addition to their advertised interest rate.
Interest rates advertised are for good credit profile applicants and typically for the purchase of new goods. Used goods can attract a different interest rate unless it is a say a used car dealer advertising finance.
The applicant’s credit rating and credit profile is assessed by the lender. Checking your credit profile for any errors prior to applying for a new loan is advisable.
Utilising Resources and Services
Loan calculators are a great free resource that prospective borrowers can use when planning their purchases and their loans. Jade Finance offers complete loan sourcing, negotiating and handling services for consumer loans. Utilising the services available can result in a lower interest rate loan which can play out to lower repayments and making those new goods more affordable.
So before rushing in to sign up for the first available loan, take a few minutes to speak with one of our consultants about how we can assist you to achieve a better loan.
Contact Jade Finance 1300 000 008 to discuss consumer loans
DISCLAIMER: NO LIABILITY IS ACCEPTED IF ERRORS OR MISREPRESENTATIONS ARE FOUND IN THIS ARTICLE. THE ARTICLE IS PREPARED AND PRESENTED FOR GENERAL INFORMATIVE PURPOSES AND IS NOT INTENDED TO BE THE SOLE SOURCE OF INFORMATION FOR MAKING FINANCIAL DECISIONS. THOSE REQUIRING GUIDANCE AND ADVICE SHOULD CONSULT A FINANCIAL ADVISOR.