Cash In A Flash
The Age
Monday July 24, 2000
Fancy a wide-screen television and new couch for the Olympic Games, but haven't got the readies in the bank? Finance company AGC is about to launch a lightening-fast loans approval system over the Internet that can grant approval in less time than Ian Thorpe takes in the 200-metres freestyle.
Called e-Class, AGC says it is a secure way to get fast loans and it will be in 7000 furniture and electrical stores around Australia from September.
AGC has offered in-store loans since 1983, but e-Class requires no cumbersome forms, faxing and waiting hours for a reply. Instead, shopkeepers can run e-Class on any personal computer connected to the Internet.
AGC managing director John Malouf says the new system should be able to deliver a decision on loan applications in about a minute.
He predicts that within a year shoppers will be able to choose their purchases and take them to an unmanned kiosk in the store that will serve as the data entry and transfer point of loan applications.
Customers will need to bring substantiating documents with them, such as a photo-ID and pay slip.
"Are you who you say you are, and do you have the ability to pay the facility back" will be the basic considerations, Mr Malouf says.
Approval is based on a formula Mr Malouf calls a "scorecard".
He expects the new e-Class loan system to generate 5000 new loan applications a month, and an eventual monthly total of 45,000.
While the loan application process has been made easier, AGC continues to charge high interest rates. It currently charges 27.5 per cent on personal loans under $5000, according to a quote obtained over the phone.
"They're not exorbitant (interest rates) in terms of the risk profile we're talking about, they're certainly not exorbitant in terms of the amounts we're talking about," says Mr Malouf. "We get repaid in dollars - not in percentages.
"I think the convenience factor of buying something on six or 12-months interest free - if you pay it off - it doesn't matter what the interest rates are because you don't pay it anyway," he says.
Mr Malouf dismisses concerns that customers could find themselves over-committed through the faster and easier loan applications.
"We're very particular who we lend to," he says. "The last thing any finance company or lending institution wants to do is to lend to someone whom they know cannot pay."
Less than a decade ago, AGC itself was in financial strife. In March 1991, it had $1 billion of non-performing loans and lost $719 million in the six months to March 1992, after a $150 million cash injection by its parent company, Westpac.
"(AGC) took their eye off the ball," Mr Malouf says. "They started moving . . . into property, large-scale property. That's a different business. You can get caught very quickly if the economy turns against you because it's not liquid. You can't cash in properties when there's no buyers for them."
© 2000 The Age