The Royal Commission into banking and finance was recently making headlines in the media and highlighted the banks and financiers responsible lending obligations as holders of Australian credit licenses.
When considering whether to approve a consumer loan application, they need to satisfy themselves that the proposed loan product meets the applicant’s specific needs and objectives, and make their own reasonable enquiries into the applicant’s financial circumstances, to ensure they are lending responsibly and not placing the applicant into a possible position of financial hardship. The applicant will also need to prove identity at some point prior to the loan being settled.
So, what does this mean to the person applying for consumer finance?
In a nutshell, the lender will ask you for more information about your finances and request supporting documents to confirm the information is correct.
A little preparation makes the process faster. By having the required information ready, you can ensure your application is processed quickly and efficiently. You will be asked the usual informationaboutyourpersonaldetails,yourfulllegalname,
date of birth, residential address, any previous addresses, employment, income, and any current loan details, which has been the case for many years. In addition, the lender will be asking you for a detailed list of your normal living expenses. These will normally fall under three categories: Fixed, Variable and Discretionary.
• Fixed expenses are the expenses that are normally constant each month, and include such items as rent/ mortgage, loan and credit card payments.
• Variable expenses are those that can change from month to month, such as groceries, car expenses (registration, insurance, fuel), and utilities, such as electricity, rates and gas.
• Discretionary expenses are those that you can control, like entertainment, holidays and gambling.
Before applying for a loan, it is a good idea to get a list of these monthly expenses, and deduct them away from your income to satisfy yourself to the level of monthly repayment you can comfortably handle – in other words, your personal budget plan. It may sound like a very basic thing to do, but surprisingly, many people do not go to the effort of doing so.
The bank or financier will probably ask for supporting documents toconfirmorprovetheinformationyouhaveprovided.
For income, this proof may include recent payslips, tax returns, notice of assessment and financial statements for self-employed people. For your expenses, you may be asked for three to six months of bank statements, tenancy ledger, loan, and/or credit card statements. For your identification, you may only need a current driver’s licence. However, you may also need some additional documents such as your Medicare card, birth certificate of passport.
Having this information easily accessible will speed up the loan application process.
All of these requirements may sound daunting. But don’t stress. Our experienced marine finance specialists at Credit One are happy to discuss any questions you may have regarding your personal circumstances, and guide you step by step to obtaining that boat loan or getting an obligation-free finance pre-approval in place.
Credit One are also agents for Club Marine Insurance to keep your pride and joy covered.
So give us a call today on 1300 Credit (1300 273 348) or visit us online: www.boatloansfinance.com.au or emailus: boats@creditone.com.au
