Easy Money At A Price
Sydney Morning Herald
Saturday July 29, 2000
Is a system to fast-track loan approvals for shoppers cause for concern?
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 loan-approval system over the Internet that can grant approval in less time than it takes Ian Thorpe to swim 200 metres.
Called e-Class, the system is a secure way to get fast loans and will be in 7,000 furniture and electrical stores nationwide from September, according to the company.
It has offered in-store loans since 1983, but e-Class does away with much of the paperwork and the delays associated with securing a line of credit. Shopkeepers can run e-Class on a 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 photographic identification and pay slips. Whether you are who you say you are, and have the ability to pay the facility back, will be the basic considerations, Malouf says.
Approval is based on a formula
he calls a "scorecard".
He expects the new e-Class loan system to generate 5,000 loan applications a month, with an eventual monthly total of 45,000.
That the loan application process has been made easier will no doubt cause many credit counsellors to cringe, as they report that finance company debt is often a problem for their clients.
AGC continues to charge high interest rates (notably, 27.5 per cent on personal loans under $5,000 was quoted over the phone).
But Malouf dismisses concerns
that customers could find themselves overcommitted through the faster
and easier loan applications, pointing out that the loans have an interest-
free period.
"I think the convenience factor of buying something on six or 12 months interest free - if you pay it off - means it doesn't matter what the interest rates are because you don't pay [the interest] anyway," he says. "We're very particular about who we lend to.
"The last thing any finance company or lending institution wants to do is to lend to someone whom they know cannot pay."
© 2000 Sydney Morning Herald