Interest rates matter—but they aren’t the only factor that determines whether a loan is right for you. Approval speed, documentation, how your income is assessed, and policy flexibility can make the difference between “approved” and “declined,” or between a missed opportunity and a completed purchase. Here’s a practical comparison to help you choose a fit-for-purpose solution.
| Criteria | Traditional Banks | Non-Bank Lenders |
|---|---|---|
| Approval Times | Typically longer due to larger pipelines and rigid processes. | Often faster with streamlined credit teams and case-by-case assessments. |
| Documentation | Strict, standardized (full tax returns, payslips, long employment history). | Flexible (bank statements, accountant letters, alt-doc options where appropriate). |
| Income Types | Prefers PAYG/salaried income; tighter treatment of variable, overseas, or new business income. | Broader acceptance of self-employed, contractor, seasonal, rental, and overseas income. |
| Credit History | Lower tolerance for recent blemishes or thin files. | Can consider context (one-off issues, recent recoveries, short credit history). |
| Policy Flexibility | Policy is uniform and less negotiable. | Policy can be tailored; exceptions more common when risk is mitigated. |
| Product Range | Broad mainstream products; deep package features. | Targeted solutions (bridging, near-prime, alt-doc, niche scenarios). |
| Pricing | Often sharper headline rates for “vanilla” borrowers. | Rate reflects risk/complexity; may be higher but can save time or the deal. |
| Refinance Path | Great for long-term once profile fits. | Useful as a stepping-stone—refinance to bank later if/when criteria are met. |
| Who It Suits | Stable PAYG income, clean credit, straightforward needs. | Self-employed, investors, time-sensitive buyers, unique income or credit profiles. |
Chasing the lowest headline rate can be costly if it delays settlement or leads to a decline. A slightly higher rate that funds on time can protect a purchase, avoid penalties, and reduce stress. In many cases, borrowers use non-bank finance to complete a time-critical transaction, then refinance to a lower-rate bank product after stabilizing income or credit.
Banks typically require full documentation to satisfy uniform policy and regulatory standards. Non-banks offer alternative documentation (e.g., recent bank statements, IR3/tax summaries, accountant letters) to verify income when traditional payslips or multi-year tax returns don’t reflect the borrower’s current earning capacity—common for business owners, contractors, and those with multiple income streams.
Non-bank doesn’t mean “unregulated” or “risky by default.” The term simply distinguishes lenders that don’t take deposits like a bank. Many operate under robust lending standards, fund through wholesale markets, and service loans professionally. Safety comes from prudent credit assessment, transparent terms, and responsible borrowing—not the label on the door.
This article is general information only and not financial advice. Consider your circumstances and seek professional guidance before making lending decisions.