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BID Responsibility

4 Sep 2020 2:46 PM -
Are you BID Ready?

As we move closer to the introduction of the Best Interest Duty (BID) for mortgage brokers from 1st January 2021, it is important to understand that the new legislation covers consumer related credit products, often arranged by mortgage brokers. This includes, unsecured personal loans and consumer asset finance transactions for the purchase of cars, motor cycles and other recreational assets such as caravans and boats.

Some mortgage brokers prefer to write consumer asset finance and personal loans through the one or two direct lender accreditations they may have held for many years. But will this be sufficient to meet BID obligations from January 2021? Most likely not.

We have included two scenarios to illustrate how a comprehensive lender panel is vital to ensuring the client's best interests are met. Both scenarios and product recommendations were determined from our list of consumer lenders which include: 
  • Automotive Financial Services
  • FirstMac Asset Funding
  • Finance One
  • Liberty Asset Finance  
  • Latitude Financial Services  
  • Macquarie Leasing
  • MoneyPlace  
  • Money3
  • NOW Finance
  • Pepper Asset Finance
  • RACV
  • Plenti (formerly RateSetter)
  • Society One
  • Volkswagen Financial Services
  • WISR

SCENARIO ONE

The client is looking to purchase a 2 year old vehicle from a dealer for $30,000 fully financed. This client is a PAYG nurse who is also a homeowner. In addition to an affordable rate and repayment, the client has specifically requested the loan to include some extra features. These features include NO account keeping fee, NO or minimal early termination fee and a 84 month loan term to keep repayments low. 
 
She anticipates a fairly large inheritance in 2 years. She would like the option to pay out or she will be out of her fixed home loan period and would like to refinance and consolidate the car loan into her home loan.
NLG Leasing were able to offer the referring broker the below lender options to present to their client.  
*Rates presented are at full recommended retail rates.

Whilst all lenders can offer 84 month loan terms, there is a 1% rate loading for loan terms above 60 months with Macquarie. What's more, neither Macquarie or Pepper offer a NO early termination fee or NO Account Keeping fee product. WISR was the preferred lender option recommended to the client.

SCENARIO TWO

A long term PAYG client looking to purchase a new caravan for $50,000. They are a homeowner, but also have an investment property purchase on the cards so serviceability for this potential commitment needs to be considered. As the client intends to hold the asset long term, they want to be presented with both 60 and 84 month loan term options.
 
The broker has written multiple home loans for the client and therefore only wants to earn a minimal $550 from the deal. This broker holds both Macquarie and Pepper direct accreditations which they could use to write this deal. These lenders will approve this loan scenario, but are there better more suitable products available?

To ensure the client ends up with the best available product, the broker consults with NLG Leasing to compare other products against their Macquarie and Pepper options.  

NLG Leasing were able to present a third lender; RACV Finance. With RACV they were able to save $3 per month over a 60 month term and a massive $24 per month for the 84 month loan term. Additionally, the broker will earn $300 more in commission than anticipated whilst still offering a significantly lower repayment to their client.

The client wins, the broker wins, and all whilst NLG Leasing assists with the submission, loan documentation and settlement.  
So why wait until January to experience the NLG Leasing difference? Get BID ready now and start referring to our friendly team whilst providing your clients with access to a market leading selection of lenders and loan products.

Happy to help.

If you are looking for a solution to assist your consumer and commercial clients with all asset, equipment and cash flow finance solutions - but don’t yet have the knowledge and can’t justify the high costs associated with multiple accreditations, specialist systems or a full time specialist on the payroll – then NLG Leasing is the right business partner for you. If you would like more assistance, please contact the NLG Leasing team on 1300 722 011 or email support@nlgleasing.com.au