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The difference between Non-Bank Lenders and Traditional Lenders

banks vs non-bank lenders
banks vs non-bank lenders

Years and years ago, if you needed a loan, you went straight to the bank to assess your available options. These days, non-bank lenders have emerged, offering a legitimate alternative to traditional lenders, and adding a competitive edge to loan marketing.

Depending on your circumstances, it may help you to step away from traditional lenders and hunt for a non-bank lender. But do you know exactly what the difference is between non-bank lenders and traditional lenders?

We will take you through both options and look at exactly how they differ in terms of what they offer to you, so you can judge which one would best meet your current needs.

What Are Non-Bank Lenders?

Essentially, non-bank lenders are exactly what you think. Non-bank lenders are alternative lenders who are not traditional banks. They don’t have a banking license and are not a mutual, ie a bank, a building society or a credit union. Nonbank lenders are called Authorised Deposit Institutions, or ADIs.

Unlike banks, they can’t accept deposits, so they have to source their money from elsewhere. They often take out a loan from the bank at wholesale rates and then lend this money on for a profit.

What are Traditional Lenders?

Traditional lenders refers to banks and other ADIs defined above. They have been the source of loans throughout history, and only recently has this turned around with the proliferation of non-bank lenders entering the market.

They are regulated very differently to non-bank lenders. Banks are largely regulated by the Australia Prudential Regulatory Authority (APRA), while non-bank lenders are regulated by the Australia Securities & Investments Commission (ASIC).

Benefits of Using a Non-bank Lender

While choosing to go with a non-bank lender may not be the obvious choice, there are a number of benefits that come with using one.Lower interest rates: They borrow their funds at wholesale prices, which offers them a larger margin to work with than the banks, and can often mean they have lower interest rates than the banks. They also have limited fees as they don’t have any of the overhead costs that traditional lenders face.

Regulations: being subject to different regulations means non-banks are often a lot more flexible when it comes to lending. This enables them to tailor the process to specifically meet your needs.

Take on high risk

Whether you have a bad credit history you are trying to repair, or a business start-up, non0bank lenders are more likely to take a risk on you than traditional lenders.

Better customer service

As they are smaller than the banks, non-bank lenders often offer a more personalised approach to their customer service, so you will receive more attention to your loan and what you want out of it.

Lower down payment requirements

While banks take about 20% down payment on mortgage loans, non-bank lenders take a lot less, sitting at about 3.5%. For those who have been turned away by the bank, this is a great option to make owning their own home a possibility.

Faster approval process

With fewer hoops to jump through, non-bank lenders have a much faster approval process than traditional lenders, so you have the money in your hands even faster.

Specialists

Often, non-bank lenders can specialise in a particular loan. While traditional lenders offer an array of financial services, by specialising in just one, non-bank lends have a greater insight into that type of loan and can help you out more.

Benefits of Using a Traditional Lender

There are also some benefits that come with using a traditional lender that shouldn’t be overlooked.

Security

One of the biggest, is course, security. The banks are well-established institutions with a degree of trust built into their name. Many people feel safer with this option and sticking to what they know – especially if they already bank with them.

Less vulnerable

As banks are much larger than non-bank lenders, there is a perception that they aren’t as vulnerable to any economic hardship that may come about.

Which One Is Right For Me?

Many people perceive that traditional lenders are the best and safest option, especially when it comes to taking out a big loan, such as a home loan. This just isn’t the case anymore, and by not considering all your options, you are limiting yourself and potentially missing out on the right fit for you.

Loans Based Upon Your Unique Situation

Working out which option is best for you really does come down to your individual circumstances. You need to make a choice based on what you need the money for, what your credit situation currently is, and which service is more compatible with your needs. Shop around and find the best option for you.

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Private Lenders

What Are The Benefits Of Using An Alternative Lender?

what are the benefits of using alternative lenders

Following the GFC, banks became very cautious with how they lend their money. They didn’t lend to certain borrowers particularly those with bad credit or small businesses – in the fear that they would not be able to get their credit back. As a result, many businesses fell into bankruptcy because they had no one to turn to for financing.

If you’re looking to start a business, it can be even more challenging to secure financing from a bank. To get your business operational you may need some sort of finance. This is because you cannot start a company without the necessary capital to sustain it. When banks close the door your business dreams, just remember that it is not over yet. Aussies have one more form of financing that they can use – and that’s alternative lending. Slightly different from the traditional bank, alternative lenders have become quite an attractive choice for those that are in need of a loan.

What Is an Alternative Loan?

Alternative loans are the kind of businesses that aren’t provided by traditional lenders – for example, banks or credit unions. Examples of these kinds of loans are private loans, bad credit loans, wholesale funds, peer-to-peer loans, start-up loans, and so on.

Each of these loans has its own terms and conditions – which is why you must research accordingly. Depending on the lender, you might be asked for a higher interest rate, or given a smaller loan amount. But depending on your preferences, you will choose the one that is most suitable for you. Overall, alternative loans offer a second chance at finance.

Why choose an Alternative Lender?

There are various reasons why you might want to go for an alternative lender.

The Application Process Is Quick and Easy

Every alternative lender will have a straightforward loan application process. Technically speaking, all you have to do is provide some basic contact (or business) information, along with some financial data. A lender will need to quickly assess your financial situation to see whether they have the right loan product available.

Depending on the lender, you can expect to have your application completed in as little as 15 minutes, provided you are working with a tech-savvy lender. If you are borrowing online, it is even more convenient, as you will not have to get out of the comfort of your home in order to make the application.

Funds can be released quickly

It takes a few minutes to a few hours for your application to be approved – all depending on the time at which you make your request. The quicker that you work with the lenders, the faster you can get your funds. At the Australian Lending Centre, we offer an easy way to upload your documents. It takes a matter of minutes and can be done from your mobile. From the moment your application is approved (assuming it is), it can take as little as 24 hours for the money to appear in your account (depending on the lender)

Some lenders do so in 48 hours, but this is still the better alternative to traditional banks, for which you will likely have to wait entire weeks. This way, it will be much easier for you to start off with your projects right away.

You May Borrow with Bad Credit

If you have no credit or bad credit, there is a high chance that banks will not lend you money. They will see you as a red flag – and they will believe that you will not be able to make your payments on time. Unless your credit is above a certain number, there is a high chance that your request for a loan will be denied.

However, alternative lenders such as Bad Credit Loans generally have far fewer requirements. Whilst they still asses your finances, they will still lend to bad credit borrowers. Therefore, if you had trouble making timely payments before or had no luck with traditional lenders, then there is a high chance that you might be luckier with an alternative lender.

You May Use the Funds However You Want

Certain lenders expect that you use the funds that they give you in a particular way. For instance, if you are the owner of a construction company and opt for taking out a business loan, then you need to specify what you plan on doing with that money. As an example, you have to specify in the application that you need the loan to buy a bulldozer – and the lender will know that your profits will start growing with that purchase.

However, with alternative lenders, this will pose no problem. For all they care, you may use that money to buy a bulldozer, pay old Jim’s paycheck, or purchase a new fancy pen for the office. Obviously, you will use that money wisely – but what matters here is that the lender won’t set conditions on how to use that money.

Should I use an alternative lender?

Alternative lenders represent a very convenient solution when you are running low on money, but the banks won’t give you a loan. Alternative lenders offer people who have been refused in the past with a second chance at finance. All that you have to do now is find the right lender that will provide low-enough interest rates.

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Fast Loans

Why You Could Afford Same Day Cash Loans

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Are your personal finances looking rather blemish?  Fortunately, you are not alone. Thousands of Australians get caught up with their finances. Do you need money right away to pay for rising electricity bills, an overdue credit card or the mispayment for after pay?

Some people have insufficient income; others are in between jobs while some people simply need to keep up with their rising business expenses. The fact is that sometimes we need money, and we need fast and flexible options. Same day cash loans with no credit check can help you get a grip of your financial situation and brighten it all up.

Whilst a loan may seem like a daunting option, it can be the saving grace. Managing and planning your small cash loan, can help you regain control and get back on the financial road to success.

Here are smart tips to manage your same cash loans wisely

Develop a desire to break away from a life of scarcity

Every problem is an opportunity to make that big step in life. Getting a loan is the first step to financial control. There are times that you may find yourself not getting enough money from your income sources.

Some projects don’t end up successfully and there are also life-emergencies that you need to deal with. But, it is the desire to be stable that can promote you to become productive and creative with your finances. At the same time, prepare yourself for a little discomfort. The road to success may not be smooth. In fact, you have to get out of your comfort zone so that you can use the challenges that come along your way in order to become financially stable.

Start budgeting immediately

There is no ideal time to start a budget. Once you decide to keep your expenses at bay, creating a budget becomes an urgent necessity. Write down your cash flow, assets, and liabilities. Allocate the money to your priority expenses. Make sure that you leave something for your daily expenses; otherwise, you may have to take out another loan just to get by before the next payday. Budgeting planners can make it even easier to visualise where your money is coming and going.

It is also important to consider your smart goals when making a budget. Remember that loans don’t make you rich, but it can make you worse off if you know how to use it. Debt is considered as a money management tool.  All it takes is intelligent goal setting and follow-up intervention to adhere to the plan.

Your budget can serve as a wealth management structure that helps you maintain financial discipline along the way. Don’t be afraid to set aggressive financial goals, as long as they are realistic. You must be able to confidently stick to these goals.

Work through these goals with a sense of urgency. Don’t put off budgeting for tomorrow – no matter how tempted you are to do so. You can maintain a logbook, to jot down all your daily financial activities. Note the expenses and debts you settled for the day and their value of importance in your daily life. This way, you can monitor your progress and evaluate your plans of action. In a month, you will already see how much of your plans are actually being carried out and which ones are not working. If you are moving in the right direction, your goals are realistic and obtainable.

Practice makes perfect

Develop the tools and learn how to succeed financially. When you can’t quite reach your goals the first time, keep trying. As long as you do your best, repeatedly, to make your budget work, you will definitely get better in time. Incremental changes are also worth celebrating. Small changes daily will make little gains and those steps will add up as you keep doing the work.

To be truly successful in budgeting and debt repayment, you need to have exceptional discipline and perseverance. Commit to live within strict budget constraits is crucial to living within your means. Don’t spend money your don’t have and you won’t increase your debt. By following your own budget, you’ll likely to have reduced debt, and you will also feel a high degree of satisfaction for being able to stick to your financial plan.

Financial stability is a goal we can all achieve

Stable finance is a goal we can all accomplish. Australian Lending Centre could provide a same day cash loan with no credit check if you qualify with our requirements, regardless of your credit score or the absence thereof.

We understand that people need financial opportunities to start or build a good credit file and a chance to improve their finance by way of a loan. If you are willing to learn the right ways of setting up a business, or for managing your debts and increasing your revenues, Australian Lending Centre can help you.

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Personal Loans Home Loans News

Mortgage Broker vs. Banks: Which Is Better?

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The verdict of a mortgage broker vs. banks contest may seem difficult to assess at first glance. Both can help you with good rates on your home loan, but there are some things they do differently. Maybe, after all, you’ll be the one to say who the winner is in the mortgage broker vs. banks competition.

Mortgage Broker vs. Banks – What Does a Broker Do?

A mortgage broker is fundamentally an advisor. This is the person that will investigate whether you are worthy of a loan or not. You guessed it – your credit score matters, but that’s not all. Your income and, subsequently, your ability to pay the loan back will be taken into consideration, as well. If you are eligible, the broker will look for the best offers that suit your needs.

The greatest advantages of using brokers instead of banks are their expertise and the fact that they may not frown at your bad credit. They know a lot of other lenders that can provide you with suitable offers. Because they are not affiliated with any banks, they are sure to find lenders that don’t really care for your stained credit file. They may even be specialised in serving people in predicaments. This particular section in the mortgage broker vs. banks contest is definitely won by the former.

A mild disadvantage when it comes to brokers is their number. There are so many that it may be difficult to choose the best one. Before you call on an agent, make sure that he has been in the business for a long time. Simple research can be very useful. Friends or relatives that previously used brokers to get good deals can also guide you.

What Do Banks Do?

In the same fashion, banks will assess your creditworthiness by having a bank loan officer to manage your files. Banks are often scarier than brokers because of the higher rates and fees. Loan officers have years of experience in banking and finances, in general, so you can rest assured that you’ll get the best rates.

Although banks are not inherently bad, they might prove to be an actual impediment in your way. In contrast with the brokers, banks always look at your credit score. They are not that eager to lend money to people who have a bad credit score.

Another disadvantage is that when you work with a bank, you will be given only the loans that the particular bank is offering. On the other hand, a broker can have access to a wide variety of lenders and loans.

Which One Is Best?

Both have their advantages and disadvantages. If you have bad credit or you want a wider array of options, a mortgage broker is a perfect choice. If you have good credit and the offers of the financial institution would suffice, a bank would do as well.

In other words, the verdict on mortgage broker vs. banks depends on your needs, the cleanliness of your credit and the deal you are trying to get.

If you still have questions, read more about non-bank lenders HERE.

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Investment Property Loans

Investment Loans – Hiking Rates from Comm Bank

investment loans

Getting loans for investment properties is going to get a bit more expensive. CBA has recently announced that it will be raising rates on loans for investment properties. Variable rates for investor home loans will go up by 27 basis points bringing the rate up to 5.72 percent.

Investment Loans – Rising Rates

Fixed rates for investor property loans will also be going up. A five year fixed rate loan will go up to 5.04 percent, a rise of 10 basis points. The one, two and three year fixed rate loans on investor homes will be climbing 30 to 40 basis points.

On the other hand, owner occupier home loans have experienced another drop. Fixed rates on owner occupier home loans have gone down by up to 30 basis points bringing the rate to below 5 percent. As of July 22nd, the three year fixed rates dropped by 20 basis points coming to 4.64 percent. Two year rates will fall by 10 points to settle at 4.64 percent as well. The biggest drop in fixed rates on owner occupier homes will be the 30 basis point drop to 4.84 percent on four year loans.

Despite these recent changes to variable and fixed rates on loans on investor homes there has been an increase of loan approvals for investment properties in Australia in the last 12 months. Even with all of the recent changes to investor lending policies the rate of loan approvals has risen by 22 percent in just the last year.

Banks are seeking to find a balance between owner occupied home loans and investment property loans on their books. The changes in the pipeline set out by the APRA have caused banks to take drastic measures to make sure their books will be balanced when the new rules on investor lending caps begin next year.

Banks need to do whatever they can to increase the amount of owner occupied home loans compared to investment home loans. Other banks reported that they are reviewing their policies and rates and will do whatever is needed to meet the APRA’s standards.

Rising rates on investment home loans will likely be the norm for the near term. The big banks are where many investors turn for their home loans but there are other options. Institutions such as the Australian Lending Centre offer rates on investment home loans that are competitive with the big banks and can suit any investor. Enquire online now to find the most suitable investment loans for you today.