If you intend to buy a house or a car then you are always wondering:
Lenders in Australia are essentially businesses, which make money off the interest they impose on the loan. In extreme situations, home equity or other securities are used as the profit from lending services. There is a number of types of loans which are offered to the public:
There are also other variations of financing but the above types of loan are probably the most popular. The lenders in Australia themselves specialise as:
Mortgage lenders in Australia are institutions which deal with large funds.
The most financially secured are banks but there are also others like building societies, loan companies and even private lenders.
Although banks offer the strongest long term financial security, the smaller guys provide a better interest rate. Sometimes the difference can be as high as 1%
If you intend to obtain a mortgage for under $150K or pay off the loan within 10 years then the interest rate should be a decisive factor. However, long term mortgages should be based on the overall loan package:
Loan companies in Australia emerged as a strong competitor against the banking establishment. These businesses have large resources but not enough security to be called banks.
This means that loan companies have to offer good deals to attract clients away from banks.
Currently, these lenders in Australia are able to provide great interest to home loans. Also, they offer personal loans and the car finance which exceeds benefits provided by major banks. Thus, loan companies are lenders of choice for short and medium term loans.
Again, this is a balance between financial security and the great interest rate. Let's assume you have obtained 1.5% discount on the home loan interest rate from the private lender.
This is great but after 5 years the company goes down. In the process you are required to pay an interest of 6% higher then that from the other lenders.
Therefore, for personal loans and consolidation of credit card debts the private lenders are great. However, for long term loans this may not be the optimal solution. Finally, private lenders offer instant cash loans. This feature carries high interest rate but it is not offered by bigger lenders.
Commercial lending companies in Australia specialise in funding businesses. Federal and State Governments have already structures in place to help indigenous Australians to setup business ventures.
For other commercial projects major lenders in Australia have dedicated departments to help with the funding. Banks and serious loan companies often offer bridging loans to initiate the project prior a final loan approval.
Major banks are probably the commercial lenders of choice. They do not offer great interest rates but provide good flexibility and financial security.
Anyway, most commercial projects need a short term finance. Therefore, slightly lower interest rate may not be a decisive factor to choose the lender.