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Investors Central – Empowering borrowers with personalised auto-finance Australia-wide

  • Published July 16, 2014 1:48PM UTC
  • Publisher Wholesale Investor
  • Categories Company Updates

Finance One specialises in lending to clients who fall outside the main stream lenders. Simple errors such as the failure to pay a phone bill on time all the way to bankruptcy, there are many ways why individuals have acquired a poor credit history, however, each person experiences difficulty in obtaining satisfactory credit.

Jamie McGeachie, Managing Director at Finance One, a national provider of auto finance, highlights the growing customer problem “There are entire sections of the community that are deemed unacceptable credit risks.  We empower those who are now no longer recognised by the financial system but have the stability, substance and capability to pay.”

Recognising the difference between borrowers

Finance One specialises in lending to tier one individuals who have fallen temporarily from their premium credit histories.  Mr McGeachie highlights why this market deserves to be serviced; “Unlike the big lenders, we believe that a poor credit history should not exclude you from obtaining credit forever. Provided applicants can demonstrate to us that their financial situation has stabilised over time and that they have sufficient cash flow to make their loan repayments, we can approve the loan.”

There is pent-up demand in this segment for auto finance.  “Feedback we have received from our broker network is that this could be placed very quickly with high quality borrowers at low risk”, continued Mr McGeachie. Finance One has a nationwide network of 320 brokers with activity predominantly from Queensland, South Australia, Victoria, Western Australia and Regional NSW. “We receive between 400 and 600 applications per month from our broker network. Due to our rigorous selection criteria only one in five are approved for finance but even with this conservatism, we have increased from $13M under loan management to $21.2M in 12 months.  A 63% increase demonstrates the demand is persistent.”

A traditional approach to credit management

Finance One has developed lending policies to promote responsible lending and has implemented loan management procedures to mitigate the risks associated with borrower defaults. “Our rigorous risk management policies were developed since our core team started lending in this industry in 1997. This ensures funds are distributed to suitable candidates who meet our lending criteria. Our internal systems ensure our clients are micro-managed through the life of their loan.”  Finance One allocates a dedicated customer service person to manage the relationship and build long term rapport with our borrowers. “Because of this approach our defaults are about half the industry average.  Engaging with the client empowers them, and facilitating motor vehicle ownership is the end goal.”  The old approach to finance where lending is personalised is again the new approach with a face given to the facility.

Growing investor demand

With millions of Australians looking for credit in the auto finance sector, this represents a growing opportunity for lenders like Finance One.

Investors Central Limited is an unlisted public company which is the fundraising arm of the Finance One business, a wholly owned subsidiary.  Investors Central has seen strong interest from investors from around the country looking for a high-yield, asset backed security.  “The demand for this kind of product is self-evident.  With terms starting at 11% per annum and interest income paid in monthly instalments, investors are receiving exposure to a secure investment”.  Investors Central paid $2.7M in interest payments to investors last financial year, almost double the previous year.

“Under our new prospectus we are seeking to raise up to $25M over the coming 13 months to finance the demand from brokers nationwide.  Along with our current funds under management, and the fact we reinvest 100% of our profits into our loan book, we are targeting $40M in funds under management at the completion of this financing round and there is demand to sustain this investment.”  The outlook for 2014 and beyond is that the auto industry demand is anticipated to be bullish and Finance One is positioned to capitalise on this with Investors Central driving returns to investors.

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