I asked Daniel why this is so important to his company and he said:
“Entering the secured loans market was a strategic priority for us – it broadens our offering to customers and demonstrates our commitment to providing a real alternative to traditional lenders.”
For Australian banks secured loans are a key product segment and RateSetter’s announcement not only means lending and borrowing with the platform becomes simpler and safer. It also signifies a move into territory historically considered the core domain of banks and other traditional lenders.
Loans with RateSetter can now be secured against personal property, such as a car. Those borrowers able to offer an asset as security will be rewarded with more affordable repayments. RateSetter estimates a borrower could save up to $1,000 on a 3-year, $15,000 secured car loan compared with the unsecured equivalent.
Ratesetter offers a Provision Fund which is used to help protect lenders against the effects of borrower late payment or default. But now they are able to offer further reassurance to lenders by facilitating loans that are backed by an asset that may be recovered should the need arise.
“We believe RateSetter’s move into secured lending is a signal that FinTech in Australia is now getting serious – taking on the core segment of bank profits, not just nibbling around the edges”.
In March of this year, RateSetter partnered with Australia’s largest car finance broker, Stratton. Stratton is majority owned by Carsales.com.au. together they acquired a 20% equity stake in Ratesetter. The partnership allows Stratton to refer suitable borrowers to RateSetter.
As Daniel explained “this entry into secured loans will help us to target the $40 billion automotive loans market.” Just as he and Glenn were leaving I asked them just how large Ratesetter’s loan book would be this time next year: Glenn and Daniel just smiled. Traditional lenders for automotive finance need to be careful, Ratesetter is changing the landscape while they watch.