Peer-to-peer lender RateSetter is now offering secured personal loans, a product which until recently has only been available through traditional lenders like banks.
The company says by securing a loan against personal property, like a car, lending on the platform will be safer and borrowers’ rates can be lower.
“Secured loans are a vital market for banks and our move into the product offering signifies the potential for RateSetter and P2P lending to have a real impact on the banking sector as a whole,” RateSetter CEO Daniel Foggo says.
“RateSetter pioneered the concept of the Provision Fund to help protect lenders against the effect of borrower late payment or default. Now we’re able to provide additional reassurance to lenders by facilitating loans that are backed by an asset that may be recovered should the need arise.
“There will also be significant financial benefits for creditworthy borrowers who will be able to access an even better deal with a RateSetter secured loan.”
P2P lending is just one area tech platforms are attempting to disrupt traditional financial services.
“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,” Foggo says.
RateSetter will focus on the automotive loan market to begin with and has partnered with car finance broker Stratton which is majority owned by Carsales.com.au. Carsales also owns a 20% equity stake in RateSetter.
“The partnership with Stratton was a natural progression for us following our entry into secured loans and will help us to target the $40 billion automotive loans market,” Foggo says.
LinkedIn just surveyed 802 Australian millennials to figure out what they want in credit, loans and money matters. The results show those with assets of $100,000 or more are open to approaches by non-bank lenders.
More than half (52%) would try products from a non-financial brand and one in four (25%) say banks are unlikely to be their primary institution.
It’s this generational shift which P2P lenders like RateSetter are looking at capitalising on.