Five common myths surrounding non-major bank finance

April 23, 2021

When the major banks fail to meet the needs of their customers, they’ll usually end up looking for financial partnerships elsewhere, that’s where non-major lenders come in. Big banks may never admit that it’s the case, but non-major bank lending organisations are an important part of the Australian economy. 

In Housing Finance, non-bank lenders make up 7.4% of the home loan market and are a great option when searching for financial solutions. We’ve busted the myths surrounding non-major bank lenders so you can have peace of mind when exploring your finance options, outside of the big banks.

Myth #1 The only people looking for or receiving loans from non-major bank lenders have a bad credit history. 

Non-major banks deal with the same variety of customers that banks do, from the self-employed to first-home-buyers and property investors. They can consider loans for people that banks might reject, but that doesn’t mean they don’t do their due diligence. If anything, non-major bank lenders have more flexibility to go in-depth, assessing potential customers who big banks may write off without even a second look. 

Myth #2: Loans from non-major bank lenders are expensive and have unreasonable interest rates

There’s a lot of competition for lenders, so if you can’t compete, you won’t last long. This means that non-major bank lenders must keep up with the rates the banks are offering or suffer the consequences. Every loan application that we receive at Kudos Money, be it a home loan for first-home buyers, or a business loan for a growing brand, is carefully assessed by our expert team. We ensure we provide the right loan options for the client’s situation and needs, at interest rates that are competitive for them.

Myth #3 Utilising non-major bank lenders can be financially risky

The global financial crisis and fall-out from loaning laws have made it clear why rigorous processes are essential in finance. The takeaway lesson for building strong economies and funds is that dodgy just won’t do. The top five non-major banks in Australia control major balance sheets and net assets. They are businesses with excellent track records and results, led by insightful and talented leadership teams with extensive experience in the Australian lending market. 

Myth #4 Options with non-major bank lenders are limited 

The rules of supply and demand make this impossible. To stay competitive, non-major banks have to provide a wide range of options for customers. If anything, they offer more flexibility and options because they can develop loan models that are more considered and tailored to customers. Banks don’t always have the time or interest to provide this level of service. 

Myth #5 Regulations don’t apply to non-major bank lenders

Non-major banks are regulated by ASIC in exactly the same way as banks, this is through the “responsible lending” legislation contained in the National Consumer Credit Protection (NCCP) Act 2009. National banking regulator, APRA was also granted Reserve Powers in 2018 to enable its ability to intervene and regulate non-major banks if ‘systemic’ risk issues arise. It’s in everyone’s best interests to have strict regulations that build confidence in investors. 

Non-major banks continue to keep the high standards and responsibilities as contributors to Australia’s financial future. So rather than writing off non-major banks, it’s worth considering the facts. They’re an important part of our economy and continue to offer security and opportunity to our community.

Need some professional advice when it comes to finding the best loan for your needs and situation? Chat to us at Kudos Money to get started on your finance journey.  


Kudos Money Aust Pty Ltd ACN 644 339 444 is an Authorised Corporate Credit Representative (527061) under LM Broker Services Pty Ltd Australian Credit Licence 517192.

The information provided on this site is on the understanding that it is for illustrative and discussion purposes only. Whilst all care and attention is taken in its preparation any party seeking to rely on its content or otherwise should make their own enquiries and research to ensure its relevance to your specific personal and business requirements and circumstances. Terms, conditions, fees and charges may apply. Normal lending criteria apply. Rates subject to change. Approved applicants only.