A fintech lender that just launched a new range of personal loan products without any fees has reported “very positive” feedback from both brokers and aggregators.
NOW Finance is confident the abolishment of the typical establishment, account-keeping and early repayment fees that are nearly ubiquitous in the personal loan market is sure to cause waves.
The group’s CEO, Richard Blumberg, has said the offering is intended to improve the transparency and simplicity of personal loans in what can be a “confusing and complicated choice for borrowers”.
He noted that on an average 5-year $30,000 loan, fees can add up to thousands of dollars before it’s paid off.
“These fees cover real costs of executing, managing and funding loans, but we have taken the decision to absorb them so we can attract more borrowers with a clear, easy to understand personal loan product,” Blumberg explained.
“While the $60 billion personal lending market has a multitude of operators…I expect many will find it difficult to match our no-fee personal loans.”
NOW has 33,000 active customers with a loan book value of $400m – an increase of 39% in the 2020 financial year. Blumberg has reported the group is back to writing about 75% of the volume it was pre-Covid.
“Feedback on the no-fee loan has been very positive from both brokers and aggregator groups – specifically with regard to the transparency of pricing of our personal loans. It is particularly timely with broker best interest duty legislation being introduced in January 2021,” Blumberg added.
"Brokers have been surprised that this is a permanent product change and not just a special. Importantly, NOW Finance is not compensating the lack of fee revenue by increasing rates. We are absorbing the costs associated with writing a loan and giving the customer the benefit of a reduced comparison rate.
“This is a major step to ensure consumers are able to access transparent and easy to understand personal loans, particularly as the economy starts to recover.”
