Retail Lenders (via wholesale non-banks)

Retail Lenders (via wholesale non-banks)

There is a multitude of smaller lenders who offer their own loans under their own brand, using funds that are sourced from a wholesale non-bank. It’s just like goods retailing, where a shop sells a product under its own brand, using a product that is supplied by a third-party wholesaler or manufacturer. The benefit of this arrangement is that the retailer has access to wholesale rates and can pass on the savings to you.

Some people are concerned about getting a loan from a lender that may not be very well known. It’s important to remember that with a loan, the risk is very different to when you deposit your money into a bank. With a loan, there is relatively little risk for the consumer, because it is the lender who is paying the money to you, rather than the other way around. So provided that the retail lender can offer you the features you require, a competitive interest rate, good service and low fees, they are well worth considering.

It’s also worth remembering that it was these lenders who opened up the home loan market in the early 1990s, creating competition that has led to vastly cheaper interest rates for everyone. This form of lending is now a very large, well established and stable part of the Australian home loan market.