Emprise CEO Rob Gallagher catches up with Michael Rojek, Managing Director of Credit One Finance to discuss what's happening in the finance world that might be having an impact on the RV or boat markets.
[RG] Michael, there is lots of noise in the market with banks tightening their lending, floor stock finance at a premium and, of course, a few revelations coming out of the Royal Commission. How are you seeing the current market conditions affecting the RV and boat participants?
[MR] Thanks Rob. Yes, we in the financial services industry are operating in very interesting times. The Royal commission has highlighted some questionable practices by banks and other institutions relating to lending and financial planning. Realistically, we don’t see a big impact to the RV and Boat customers by banks tightening their lending guidelines which is really a result of them changing their processes to meet their responsible lending obligations of their Australian Credit License. This market is predominately supported by non-bank lenders who seem to be more agile and have a better ability to change processes and are more invested in the asset finance market to provide a competitive product while still being able to meet their obligations under NCCP.
[RG] Are the impacts on businesses the same as we are seeing on consumer lending?
[MR] Lending to SMEs has undergone some recent changes which resulted in fairer contract terms and there is talk that some ‘commercial borrowers’ may eventually be somehow be captured under the NCCP lending guidelines, however, at this point, it is business as usual. The banks have always been tough when an SME comes to them looking for working capital requirements, this is reflective in the number of ‘Fin Tech’ offering cash flow solutions which have entered the Australian market.
[RG] Credit One seems to be bucking the trend with further investment into the space despite the market noise. What allows your business to continue to service the dealers and manufacturers where the bigger banks seem to be stepping back?
[MR] We believe that we do our best to treat our customers and dealers fairly and provide a superior level of service. We have a large panel of lenders who support us, many of whom are not banks. These non-bank lenders need to lend their capital to generate a return and their distribution model relies heavily on third party introductions which includes the Credit One Group, giving us great opportunity for growth and expansion. Additionally, Credit One is in a unique position to be one of the only brokerage firms nationally to have invested in our own finance company – National Motors Loans. NML is now well established and enjoying sustained growth in the current market. Access to NML is only available to our dealer network, giving their customers access to a lender with a ‘glass half full’ view of lending which is welcome change in today’s climate.
[RG] What do you see as the big trends in the finance sector over the next 12-18 months that might affect the marine and/or caravan markets?
[MR] In recent times, a number of our lenders who have traditionally been mainly motor vehicle financiers have been looking for other asset classes to lend against to meet volume requirement. Caravan, RV and marine borrowers are normally a better performing loan book (eg lower payment arrears and losses), making them a logical choice for a lender wishing to diversify. We believe more lenders will follow this trend over the next 12 months and, of course, we always welcome additional lenders in this space as it provides dealers and their customer with more options, competitive rates and products.
[RG] Appreciate you taking the time to share your insights, Michael. Thanks again.