The rise of online lenders for personal loans is overtaking traditional banks
According to the latest data from the Australian Bureau of Statistics (ABS), more and more Australians are abandoning the big banks and taking out personal loans from other lenders.
Banks continue to lose market share from their peak days in 2010, when their market share reached 86%.
This week, it has dropped to 72%.
In contrast, small non-bank lenders have recovered lost business from banks, doubling their share from 14% to 28% over the past eight years.
Sally Tindall, research director of RateCity.com.au, says the figures reflect the growing number of non-bank lenders that have entered the personal finance market in recent years.
“These lenders compete hard on interest rates and turnaround times to get your attention,” she says.
“Their message to the consumer is, ‘Why use a bank that will charge you a higher rate and take longer to approve your loan, when we will give you a cheaper, faster loan?'”
[ratecity src=”https://www.ratecity.com.au/widgets/compare/personal-loans/big4/ratesetter/unsecured-personal-loan?pl_maxLoanAmount=30000&pl_maxLoanTerm=1″ amp-src=”https://www.ratecity.com.au/widgets/compare/personal-loans/big4/ratesetter/unsecured-personal-loan?pl_maxLoanAmount=30000&pl_maxLoanTerm=1″]
Although personal loan interest rates advertised by non-bank lenders are much lower than those of the big four banks, Tindall says consumers should compare products carefully.
“Just because a non-bank lender advertises a low interest rate doesn’t mean you’ll qualify for that rate,” she says.
“These interest rates are generally best-case scenario – what you’ll get if you have a great credit score, a solid income, and proven savings. However, many people who apply for personal loans find themselves in a very different financial situation.
“In this case, it is likely that you will be charged a higher interest rate. In addition, if your financial situation is complicated, the evaluation of your loan may take longer.
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