Target Market Determination

The product is suitable for customers who meet the general eligibility criteria, which is as follows:

• Minimum age of 18 years
• Earning more than $30,000 p.a. from employment (Centrelink may be supplementary income)
• Australian citizen or permanent resident
• Good credit history
• Have eligible assets (car, motorbike, caravan, marine vessel) to use as security for the loan
• Loan purpose varies, but mainly for personal use.

The product is designed to meet the needs of customers looking to fund a personal purpose such as:

• Buy or refinance assets, e.g. car, caravan, marine vessel, motorcycle
• Better manage personal debt obligations through consolidating debt (better interest rate/repayment amount)
• Finance a personal need (renovation, holiday, other large purchase).

The key factors a customer considers when applying for a personal loan are:

• Interest rates, associated fees, and repayment obligations
• Flexibility to pay out the loan early
• Ease of application and time to approval
• Security and eligibility
• Brand trust.

Secured Personal Loan Product Features

The key product features are:

• Borrow between $5,000 and $70,000
• Choose between loan terms of 2, 3, 5 or 7 years, with monthly or fortnightly repayments
• Risk adjusted pricing, based on the customer’s credit profile
• Fees include an establishment fee, included in the total loan amount, and relevant dishonor fees.

Security requirements:

• Eligible asset types include vehicles, motorbikes, caravans, marine vessels
• Minimum security value required is $10,000 - $20,000 (depending on loan size)
• There is no limit on the age of asset
• Comprehensive insurance may be required.

The product meets customers’ needs through the following key benefits:

• Access a rate quote (price/cost discovery) and self-determine if the product is suitable, in a quick and simple way prior to a formal loan application.
• Fixed repayments and rate over the lifetime of the loan, to give the customer certainty of product cost.
• The ability to pay out the loan early with no penalty fees.
• No ongoing monthly fees.
• The timing of direct debits can align to the customer’s pay cycle.
• The digital application process allows customers to apply quickly and easily.
• Ability to access a better interest rate, higher loan amount and/or longer term by pledging an asset as security.

Product affordability is assessed at the time of application to ensure the loan is affordable by:

• Complying with responsible lending obligations
• Reviewing bank statements to verify income, expenses and liabilities as part of the assessment process
• Performing a credit file check to confirm liabilities and repayment history
• Assessing serviceability and product suitability.

The potential for a customer to misrepresent their financial needs, liabilities and expenses is controlled by:

• Reviewing bank statement to verify income, expenses and liabilities, credit file check to confirm other credit facilities and repayment history
• Performing identity and fraud checks
• The verification of income with bank statement or through payslips.

A customer’s inability to meet financial obligations due to financial hardship is controlled through the provision of hardship arrangements, made available to customers as a way to manage short term change in their financial circumstances.

Changes in the customer’s needs during the life of the loan are managed by:

• The ability to pay out the loan early, with no penalty
• The option to refinance with loanless.

Asset eligibility is assessed at the time of application by:

• Confirming the value of the asset via Glass’s Guide or Redbook
• Confirming the asset is unencumbered or an existing financier will be paid out
• Confirming the borrower is the owner of the asset.

The potential for the security to change during the life of the loan (e.g., security is sold, stolen, written off):

• Customer can replace the existing asset with another asset
• Insurance or customer payout
• Convert from a secured personal loan to an unsecured personal loan (with a change in interest rate).

Customer Experience Metrics

Common reasons why a customer may not proceed with an application

Customers may not be satisfied with the quote element of the product because:

• Due to the use of risk adjusted pricing, the advertised interest rate may be lower than the rate quoted to the customer
• The application may be declined (i.e. customer was not eligible for a quote).

Typical complaints made by personal loan customers

Customers may not be satisfied with the purchased personal loan product due to:

• The fees or interest charged when payment obligations are not met
• The options available for changing loan repayments (varying the contracted amount or frequency)
• The credit enquiry recorded on the customer’s credit file
• Accessibility to account/payment change information
• Estimated value of asset used as security
• Higher interest rate on conversion to unsecured personal loan.

Review Triggers

Events that would signal to loanless that the target market determination requires review, include:

• A material change to the product or its distribution
• A significant increase, beyond expected levels, in the volume of nature of complaints, dispute or defaults
• A change in law or its application, a change in relevant industry code, an AFCA determination, a court decision, or ASIC or other regulatory guidance that materially affects the product
• Feedback from a regulator or consumer group which relates to the suitability of the product or its distribution
• A significant dealing event.

A significant dealing event is selling a product to a segment of customers who fall outside the target market.

loanless will stop distributing its secured personal loan (a ‘stop distribution’ event) if:

• A systemic issue occurs, which suggests a breach of core compliance obligations
• A cybersecurity event results in a compromise of customer data or fraudulent compromise of the business
• Funding limitations restrict the funding available for loans.