Peer-to-peer lender RateSetter is now offering secured personal loans, and will focus on the automotive loan market to start with, according to Business Insider Australia. RateSetter has partnered with car finance broker Stratton, which is majority owned by Carsales.com.au. Carsales also holds a 20 percent equity stake in RateSetter.
RateSetter CEO Daniel Foggo says,
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 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. On RateSetter’s Australia board, Greg Roebuck, CEO of Carsales Ltd, which owns 50.1% of stratton, is listed as the alternate for Rob Chaloner, managing director of Stratton.
Regarding Stratton, the Sydney Morning Herald notes that the company in July said it would acquire 75 per cent of finance broker All About Finance, a specialist lender for boats, caravans and motorcycles. “Stratton can also offer car loans at a prime rate of 3.79 per cent a year for certain buyers seeking high-value cars that can be securitised – but not all cars can qualify for such an attractive rate,” the Herald added. “But banks charge interest rates of between 12 per cent and 20 per cent on personal, unsecured loans, which are often used to buy cars. RateSetter says this dynamic has created a gap in the market.”
Business Insider notes a recent survey by LinkedIn that asked 802 Australian millennials to figure out what they want in credit, loans and money matters. According to the results, those with assets of $100,000 or more are open to approaches by non-bank lenders–such as RateSetter. Over half (52 percent) would try products from a non-financial brand, and one in four say banks are unlikely to be their primary institution. It’s a distinct generational shift, which RateSetter is hoping to take advantage of.
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.