Where There’s Smoke, There’s Fire: How to Check a Lender Before You Borrow

There are more lenders in Australia than ever: banks, non-banks, fintechs, private lenders and funds. That competition is good for borrowers, but it also makes it harder to tell a reputable lender from one you should avoid. A few simple checks can protect you from expensive mistakes and outright scams.

Check who you’re dealing with

• Credit licence: search ASIC’s professional registers for the lender’s Australian credit licence. Home loans and other consumer credit must be provided by a licensed lender.
• AFCA membership: check whether the lender is a member of the Australian Financial Complaints Authority, which gives you free dispute resolution if something goes wrong.
• Company details: look up the ABN and company record, and check how long they’ve been operating.
• Reviews and track record: look beyond the lender’s own website.

Red flags

• Fees demanded upfront before any approval
• “Guaranteed approval” regardless of your credit history
• Pressure to sign immediately, or reluctance to put terms in writing
• Requests to pay into a personal account or by crypto or gift cards
• Unsolicited calls, texts or social media messages offering loans
• Details that don’t match ASIC records, a sign of a cloned or impersonated lender

Read the loan documents carefully

Before you sign, check the total cost, including establishment, ongoing and exit fees, the default interest rate, what triggers a default, and what security you’re giving. For business and private loans, which often sit outside consumer credit protections, get independent legal advice.

Why using a broker helps

Peak Capital is a member of the Mortgage & Finance Association of Australia (MFAA) and AFCA. We only work with lenders we know, and we review the terms with you before you commit. If a deal needs a private lender, we use established private lenders and funds and walk you through the costs and risks. Read more about our private lending options and why use a broker.

Frequently asked questions

How do I check if a lender is licensed?

Search ASIC’s professional registers for the lender’s name or Australian credit licence number. Lenders offering regulated consumer credit, such as home loans, must hold a licence or be an authorised credit representative.

Do business lenders need a credit licence?

Not always. Loans made mainly for business purposes are generally outside the National Credit Code, so some business and private lenders aren’t licensed. That makes it even more important to check their track record, AFCA membership and loan documents.

What are common loan scam warning signs?

Upfront fees before approval, pressure to act immediately, guaranteed approval regardless of credit history, requests to pay into personal accounts, and contact through unsolicited messages.

This article is general information only and doesn’t take into account your objectives, financial situation or needs. Speak to us or your accountant before making a decision.