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At a time of ongoing upward pressure on household budgets across a range of measures, every dollar counts for many Australians and their families.
Against this backdrop, leading non-bank lender, Pepper Money has commissioned new research looking at how Australians are approaching financial decision-making, including their approach to understanding their options in order to find the right financial products for their needs and circumstances.
The Money Mindset Report by Pepper Money reveals that, despite almost all Australians (98%) saying that taking the time to understand their options helped them more confidently make decisions, more than half (53 per cent) have previously jumped at the first loan option they were offered without looking any further.
When asked why, one in four (25 per cent) cited a fear of being turned down elsewhere, while 1 in 3 (32 per cent) indicated they felt it would take too long to look at other options, and 1 in 3 (34 per cent) said they were just relieved and happy to have received an approval in the first place.
This contrasts with financial decision making in other areas, with 71 per cent of respondents saying they would spend time researching different options before making decisions on a phone plan and 70 per cent doing so before selecting an internet provider, but only 61 per cent saying the same about a loan.
According to Pepper Money CEO, Mario Rehayem, when it comes to big financial decisions such as taking out a loan, it’s understandable that some people will find the array of options overwhelming and that may be driving their decision making.
“The finance market has so many different lenders and variables that it can feel confusing to navigate; but taking the extra time to find the best option for your circumstances can make a much bigger real-life difference to the household budget than your choice of phone plan.”
Nearly four in five respondents (78 per cent) admitted to experiencing regret at least once as a result of a past financial decision, however 71 per cent of those said in retrospect, seeking additional options would have enabled them to confidently make a better financial decision.
“It’s important that borrowers understand there are often a range of alternative flexible finance options to explore beyond the banks, and they should seek out and understand their options before taking ‘no’ for an answer or jumping at the first ‘yes’ they are offered,” Rehayem said.
“In these times of changing lending criteria and tightening household budgets, many people will feel that the goal posts are shifting when it comes to accessing finance, particularly for major purchases such as a home, but just because a bank turns you down it doesn’t mean you’re out of options.”
“More than ever, borrowers should have an expert, like a broker in their corner to help them understand all the different lenders and loan alternatives available without all the stress.”
“It’s a broker’s role to get to know you and act in your best interests – unpack your needs and goals, analyse your borrowing capacity and understand what’s important to you in a loan.”
“An experienced broker will know what questions to ask to present you with relevant options and give you greater confidence in the financial choices you are making.”
Four in five (81 per cent) of those respondents who previously used a broker said they would do so again in the future, suggesting the experience is one they valued in helping them get to the best decision. This comes as a record-breaking proportion (70 percent) of borrowers are accessing mortgage brokers according to the Mortgage and Finance Association of Australia (MFAA).
Rehayem wants Australian borrowers to understand that there is hope, and there is help when it comes to finding the right financial products to meet your personal needs and preferences.
“While nearly 80 per cent of those surveyed for the Money Mindset Report said they believe sometimes compromises need to be made to secure a loan, the Australian financial landscape is vast and many people will have multiple options available to them,” Rehayem said.
“If taking a little extra time to understand your loan options could put more money back in your pocket, help you get the best option for your circumstances, or even be the difference between getting approved for a loan or not, surely that is time well spent.” To find out more, see the Money Mindset Report by Pepper Money here.
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