The marketplace lender has launched its first secured personal loan as it prepares to ramp up to auto loans and looks at a potential float.
SocietyOne has launched a secured personal loan product that enables borrowers to borrow up to $70,000 if they use an asset as a security.
Currently, the lender enables consumers to borrow up to $50,000 on an unsecured personal loan of up to five years; however, by pledging a security (such as a new or secondhand vehicle or boat), borrowers will be able to access up to $70,000 over a maximum term of seven years, and access a 1.00 per cent discount (with the lowest rate starting from 5.99 per cent).
The security will only need to cover a portion of the loan amount (i.e. the difference between $50,000 and the maximum cap of $70,000).
The secured personal loans are currently available via all affiliated brokers and will soon be released more broadly to any applicant seeking finance through the SocietyOne website.
Speaking to The Adviser about the lender’s move into the secured personal lending space, CEO Mark Jones said the new offering came off the back of broker demand and followed a successful broker trial in December last year.
He revealed that the move was the precursor to the launch of a fully secured auto loan, later this year.
He said: “Brokers liked that the new product was for up to seven years and $70,000, as it reduces the repayment burden on their customers, which is one of the key selling points for them...
“We’re in the business of meeting people’s needs, and what we’ve found is some people need a slightly bigger loan or a longer term, and we can give them a better deal if they offer up a bit of security to go with that. So, it’s a way of us meeting more customer needs.
“The second thing is that building the capability to do secured loans lets us build up to our next product: an auto loan. The difference between an auto loan is that the auto loan is secured of 100 per cent of a newer car, whereas a secured loan may be secured for 20-50 per cent. So, this is the first step for us towards auto loans.”
Mr Jones outlined that the move to secured loans came following the marketplace lender’s shift to warehouse funding, which reduces the cost of funds and enables it to add new products and services, but requires more capital.
He added that SocietyOne is continuing to explore a “step change” in its funding strategy as it looks to raise $50 million in capital over the next 12-18 months, which could include listing the company via an IPO.
“We haven’t made the decision to do it yet, but we’re talking to various people about our options to go and raise capital, which could mean an IPO later in the year,” he said.
Noting that the lender had seen personal loan volumes drop during the early months of COVID last year as borrowers curbed their spending and as a result of SocietyOne reducing its risk appetite, he added that volumes had bounced back as consumer sentiment had risen.
Indeed, Mr Jones told The Adviser that the lender had recently surpassed $1 billion in lending, after achieving a record month of originations in December, and would like to continue to grow volumes though a greater presence in the broker channel.
He said: “We are seeing strong momentum has returned, and we’re expecting this quarter to be a record, on the way we’re tracking.”
[Related: Personal lender joins AFG panel]
Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.
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