More Australians are ditching the big banks and taking out personal loans with other lenders, according to the latest data from the Australian Bureau of Statistics (ABS).
The banks continue to lose market share down from their dominant days back in 2010 when their market share hit 86%.
This week it has fallen to 72%.
In contrast, smaller non-bank lenders have been picking up the banks’ lost business, doubling their share from 14% to 28% in the last eight years.
RateCity.com.au research director Sally Tindall says the figures reflect the increasing number of non-bank lenders that have entered the personal finance market in the past few years.
“These lenders are competing hard on interest rate 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 loan cheaper and faster?’”
Tindall says, although the personal loan interest rates advertised by non-bank lenders are much lower than the big four banks’, consumers need to carefully compare the products.
“Just because a non-bank lender is advertising a low interest rate, don’t assume you’ll qualify for that rate,” she says.
“These interest rates are usually the best-case scenario – what you’ll get if you have an excellent credit rating, a strong income and proven savings. However, many people who apply for personal loans are in a very different financial position.
“In that case, it’s likely you’ll be charged a higher interest rate. Also, if your financial position is complicated, it may take longer for your loan to be assessed.”
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