Wednesday, February 7th, 2018 - Jacaranda Finance

Payday lending has always been a grey area in Australia. The process of payday lending involves a credit provider lending small amounts of money to consumers at high interest rates, on the agreement that the funds will be paid back with the borrowers next paycheck. This practice has always been placed under the scope as it challenges the credibility of credit providers.

 

Consumers have been left overcommitted and in financial hardship as lenders act irresponsibly, not meeting their obligations and approving clients who don’t meet the criteria of an eligible borrower.However, payday lending has become more of a rarity in light of new legislation that was introduced back in 2013.

 

The Australian Securities and Investments Commission (ASIC) outlines the requirements for responsible lending clearly, stating that credit providers must not enter into a contract with a consumer that is deemed unsuitable. Lenders must also take reasonable steps to verify the client's financial situation.

 

Daniel Wessels, founder and CEO of Jacaranda Finance, says, “We are not payday lenders. We offer longer and fairer repayment periods that give our clients plenty of breathing room. Over 20% of Australian households don’t have access to much-needed funds in the case of an emergency, making our service necessary. We take our responsible lending obligations very seriously and would never approve an applicant that didn’t meet our responsible lending guidelines. At the end of the day, if an applicant cannot comfortably afford our loan repayments, we cannot help them.”

 

On average, Jacaranda Finance approves less than 5% of clients who submit applications with the company. While this number may seem low, it further illustrates the company’s stance on responsible lending and making sure the consumers best interests come first.

 

A recent study by Investment Bank UBS has revealed that a third of Australian mortgages are based on factually inaccurate information. This pattern of expense ‘guess work’ follows through to the subprime lending channels. Jacaranda recently conducted research on 10,000 applications submitted over November 2017. It was found that 85% of applicants misrepresented their income and expenses. While consumers have certain obligations when it comes to providing information, it is common for applicants to submit what is necessary in order to receive the much needed funds, or what they believe they spend - which is often inaccurate.

 

“This system may allow for more consumers to be approved for loans, but if they have guessed their expenses and are subsequently unable to make the loan repayments, they are just being thrown head first into Australia’s growing pool of personal debt which sits at a whopping $53 billion. It’s not consumers who are at fault here. It is up to the lender to set up compliant processes in order to obtain accurate information. People are often under incredible stress when applying for a loan, needing cash quickly. Lending irresponsibly only adds fuel to that fire,” Mr Wessels stated.

 

“We cannot solely rely on traditional scoring systems, such as an applicants credit history, in today's lending environment. At Jacaranda, we’ve developed a method for scoring bank statements based on in-depth categorisation and behavioural patterns. This allows us to make much more responsible decisions when it comes to funding a loan. Once we understand that an applicant can afford our loan repayments, we then calculate a score based on their probability of defaulting.”

 

In an 18 month period, the company found that their client analysis was 14 times more precise, when it came to verifying an applicants true income and expense position, than manual analysis of bank statements. Wessels stated, “Human bias and error has been eliminated. That being said, the engine still has some human dependence when flags are raised.”

 

“We believe that Jacaranda Finance is in a league of its own when it comes to responsible lending. We are not the ‘loan sharks’ that will take a client for all they’re worth. We are here to help people in times of need. This strategy works well for us with our default rates settling well under industry norms and customer satisfaction at an all time high” Mr Wessels added.

 

“Whilst lenders must meet certain criteria, we should also ensure that consumers are educated and know how to use their loans to benefit their financial situation, not make it worse. Responsible lending and responsible borrowing go hand in hand, but it is up to us as lenders to make sure we are providing a safe and fair platform for our clientele.”

 

 

Notes to the Editor

Founded in 2013, Jacaranda Finance (Jacaranda) is an Australian-owned FinTech focused on developing and fine tuning their in house self-developed underwriting platform to create a unique – and extremely fast – scoring system for prospective borrowers.

 

A worthy alternative to traditional lending institutions, Jacaranda Finance helps Australians get on with their lives when surprise bills and emergency expenses pop up.

 

The Jacaranda Finance platform is an end-to-end underwriting tool that encompasses machine learning and thousands of data points, making the best use of economies of scale. Unlike traditional lenders, who take too long to get back to consumers and request a mountain of paperwork, Jacaranda takes the positives out of traditional and modern-day lending to approve more loans at a fraction of the time to offer one of the quickest Personal Loan services in the country. 

 

Adoption of technology, and use of data points to make decisions, has allowed Jacaranda to approve borrowers that other lenders are missing. Jacaranda has also expanded their loan offering to include a Medium Amount Credit Contract (MACC) as a $4,600 secured loan, just one component of a varied, long-term strategy to transform the consumer lending environment in a number of sectors with the use of FinTech.

 

Guided by responsible lending practices and a mission to provide Australians with a solution to a short-term cash flow shortfall, Jacaranda is completely transparent about their fees and charges and the results speak for themselves – their customer base is continuing to grow at an above-expected trajectory.

Jacaranda Finance is an ASIC-regulated lender based in Brisbane, Australia.

Australian Credit License number 456404.

www.jacarandafinance.com.au

For more information, email [email protected]

Contact Profile

Jacaranda Finance


Founded in 2013, Jacaranda Finance (Jacaranda) is an Australian-owned FinTech focused on developing and fine tuning their in house self-developed underwriting platform to create a unique – and extremely fast – scoring system for prospective borrowers.

A worthy alternative to traditional lending institutions, Jacaranda Finance helps Australians get on with their lives when surprise bills and emergency expenses pop up.

The Jacaranda Finance platform is an end-to-end underwriting tool that encompasses machine learning and thousands of data points, making the best use of economies of scale. Unlike traditional lenders, who take too long to get back to consumers and request a mountain of paperwork, Jacaranda takes the positives out of traditional and modern-day lending to approve more loans at a fraction of the time to offer one of the quickest Personal Loan services in the country. 

Adoption of technology, and use of data points to make decisions, has allowed Jacaranda to approve borrowers that other lenders are missing. Jacaranda has also expanded their loan offering to include a Medium Amount Credit Contract (MACC) as a $4,600 secured loan, just one component of a varied, long-term strategy to transform the consumer lending environment in a number of sectors with the use of FinTech.

Guided by responsible lending practices and a mission to provide Australians with a solution to a short-term cash flow shortfall, Jacaranda is completely transparent about their fees and charges and the results speak for themselves – their customer base is continuing to grow at an above-expected trajectory.

Jacaranda Finance is an ASIC-regulated lender based in Brisbane, Australia.

Australian Credit License number 456404.

www.jacarandafinance.com.au

For more information, email [email protected]


Robyn Francis
P: 0432001594
W: www.jacarandafinance.com.au

Keywords

Why Jacaranda Finance is shining a light on an industry with a history of cowboy lending

Categories

Newsrooms

Sharing

More Formats

View QR Code