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FAQs - Borrow

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FAQs - Borrow

Marketplace lending is still a relatively underutilized borrowing and investing alternative in Australia. We have put together these FAQS to help you better understand the arrangement.

How much can I borrow?

The minimum amount you can borrow is $500,000 and the maximum is $10 million per loan application per 12-month period. We can approve loans for amounts which are lower than our minimum, or higher than our maximum loan amount in circumstances where we believe this is merited. The Zagga Platform Fee is included in this maximum loan amount.

How do I become a borrower?

Simple! Simply join our marketplace on an obligation-free basis, then register with us as a borrower.

How do I borrow money?

Once you have joined and registered as a borrower, simply follow the process to apply for a loan.

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What information do I need to provide?

To register as a borrower, you will need to provide:

  • proof of:
    • identification
    • residency and/or citizenship
    • address
  • contact details
  • consents to privacy and credit checks.

To apply for a loan, you will need to provide the following to complete the application:

  • most recent three months of bank account statements
  • details of your income, expenses, assets and liabilities
  • address of a suitable property to act as security against your loan
  • acceptance that you have read and agree to our Borrower Agreement
  • details of a solicitor who will be acting on your behalf.

You can leave and return to an unfinished loan application at any time; it will be saved as an incomplete application in my Zagga. Once you submit a complete application, we will commence assessing your loan application and conduct a credit check. If your loan application is approved, you will be notified of your Zagga Credit Assessment Score and the corresponding loan interest rate.

If you accept our loan offer, we will match you with committed investors who are ready to fund your loan and will instruct our solicitors to prepare and send the legal paperwork to your solicitor for execution by you.

Can investors ask me questions about my loan application?

To assist with investment decisions, matched investors can ask you questions relevant to your loan application via the document portal on our website. We will forward the question to you and convey the answer back to all matched investors via the website.

You do not have to answer these however, your loan is more likely to be funded if you are honest and open as you will be more attractive as a borrower to investors, than borrowers who do not respond to questions. Questions asked to you and your responses, will be available to all investors to whom the loan has been matched, but not to anyone else.

Please note, when you are asked a question, it will not be displayed until you respond to and answer the question. If you do not respond, it will be recorded on the file as an unanswered question.

You must not ask for, or provide, any contact details or information that could be used to identify you or the investor. Your account may be terminated if you do so. If you have concerns about any of the above, please contact us immediately on 1300 192 442.

Who is eligible to borrow?

If you want to borrow as an individual, you must meet the following conditions:

  • be at least 18 years of age
  • have no convictions for fraud or dishonesty
  • not be bankrupt or insolvent
  • pass our credit assessment.

You can also borrow as a company or trust.

All borrowers must have an Australian bank account in the same name as the borrowing entity, and satisfy an AML-CTF identity check. This is to comply with Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML-CTF) legislation.

Zagga does not accept applications from individuals with past insolvencies or bankruptcies, nor entities that are insolvent, in receivership or in liquidation.

Is security required on all loans?

Yes, all loans through Zagga are secured by a registered mortgage over acceptable residential property, commercial property or land. Additional security may also be required.

Can I apply for a business loan through Zagga?

Yes you can apply for loans for any legal purpose, including businesses.

Will my poor credit rating be held against me?

Having a bad credit history will decrease the chances of your loan being approved however it may not automatically disqualify you. Zagga assesses every loan application on a broad range of factors that are not limited to credit history. This includes the value of the security being offered and the verified annual income of all applicants, as well as any explanation for a poor credit history.

Our experience shows us that applicants with bad credit histories typically have a greater risk of default than those with good credit histories so, if accepted, the borrower will be assigned a higher risk grade and have higher interest rates applied to their loan.

Zagga does not accept applications from individuals with past insolvencies or bankruptcies, nor entities that are insolvent, in receivership or in liquidation.

How long do the loans run for?

Loan terms differ for different loan purposes but typically run for two years.

At present, we are only able to lend for a maximum of five years for any one loan.

If I apply for a loan, do I have to proceed with it?

No. Once you have completed your loan application, we will begin our credit assessment and will advise you of the outcome.

If you loan application is approved, you will be sent an email with the relevant information, including your Zagga Credit Assessment Score, the applicable interest rate and terms and conditions of the loan. At this stage, you may decide whether you would like to proceed with the loan. If you decide not to proceed at this stage, you will not incur any fees, other than a valuation fee if applicable.

If you would like to go ahead with the loan, we will match you with committed investors and will instruct our solicitors to prepare the legal paperwork. If you change your mind after this stage, there may be fees payable including a Platform Recovery Fee and legal and documentation fees incurred by the Trustee. All fees and charges will be disclosed to you during the application process. Please see FAQs – Borrower / What fees do I pay? for further information.

How is my loan application assessed?

We undertake a comprehensive assessment to determine your credit worthiness and the quality of your loan application. This process includes external and internal credit checks to establish your financial history, a determination that a loan meets your requirements and objectives, and assessment of your income and financial records to determine your expected ability to meet repayments.

Each loan will be graded on a variety of factors including the loan amount, value of the security property, and type of security offered. We will then advise you if your loan application has been successful, and if so, which credit grade and interest rate will apply to the loan. If you have any questions about your assessment, please email us, or call 1300 192 442.

How does Zagga verify the information I provide?

In order to verify your identity and financial situation, we may conduct checks against your:

  • bank accounts
  • credit history
  • driver’s license
  • passport
  • residential address

Can I change the amount I want to borrow?

It is possible to change the amount you want to borrow, but it will depend on your situation as each loan application is assessed on its individual merits, including loan to value ratio (LVR), income and security offered. Please contact us on 1300 192 442 to discuss.

What is the Zagga Credit Assessment Score?

We calculate a borrower’s credit score from a credit check and the information supplied in the loan application along with the loan to value ratio of the security offered. This includes a borrower’s credit history, their income and expenditure, an assessment of their likelihood of default and the security valuation. The Zagga Credit Assessment Score assigned to a borrower is the basis for the interest rate they will pay on a loan.

What happens after my loan is approved?

If your loan is approved, you will be sent a loan offer in which we will advise you of the interest rate and terms and conditions of the loan. You will have the opportunity to review and either accept or decline the loan offer.

If you accept the loan offer, your loan will be matched to suitable investors for funding and we will instruct our solicitors to prepare and send the legal paperwork to your solicitor. You will be advised once your loan is fully funded.

If you accept our loan offer and sign the Borrower Agreement, we will match you with committed investors who are ready to fund your loan and will instruct our solicitors to prepare and send the legal paperwork to your solicitor for execution by you. Should you then withdraw from the loan any time between accepting our loan offer and your Borrower Agreement, and the date on which the loan is settled, you will be liable for payment of fees. Please see FAQs – Borrower / What fees do I pay? for further information.

Why was my loan application declined?

There can be many reasons why your loan application was declined, including your expected ability to service the repayments, your credit history and the value of the asset(s) offered as security. You may not have provided us with all, or the correct information, to make a proper assessment. If you feel that to be the case, please contact us on 1300 192 442.

Can I withdraw my loan application?

You may withdraw your loan application at any time provided it has not been fully subscribed by investors. You may do this by logging into your account and deleting the relevant application. No fees will be charged for withdrawing a loan application at this stage other than a valuation fee, if applicable. However, if you withdraw your loan application once it has been fully subscribed by investors and awaiting settlement, you will be charged a Platform Recovery Fee to cover our processing expenses, and any legal and documentation fees incurred by the Trustee. Please see FAQs – Borrower / What fees do I pay? for further information.

Will investors see my personal information?

Once we have matched your loan to suitable investors, they will be given access to your loan information.

Our secure document portal allows a matched investor to log in using their assigned password and view relevant loan information and supporting documentation. However, borrowers’ names and personal contact details will not be released to investors.

Registered investors are bound by non-disclosure provisions, to not disclose any information about borrowers and their loans. Zagga takes this requirement very seriously and will take steps against any investor who breaches this. All investor activity on the portal is tracked and audit-trailed.

Contact details or any information that can identify borrowers or investors must not be asked for or exchanged. Parties must not attempt to contact each other or transact outside the marketplace.

What interest rate do I pay?

Interest rates differ from borrower to borrower, and loan to loan depending on the Zagga Credit Assessment Score and the loan purpose.

The Zagga Credit Assessment Score is an alpha + numeric grading system that we assign to borrowers based on the loan specifics and the information they have provided – the better the credit history, the better the credit score and the better the interest rate on the loan. If the credit history is not perfect, or the loan to security value ratio (LVR) on the loan is higher, the Zagga Credit Assessment Score will reflect this resulting in a higher interest rate to meet the higher risk.

For detailed interest rates, please refer to Borrower rates and fees.

What fees do I pay?

Our Zagga marketplace is designed to enable creditworthy borrowers to borrow money from committed investors. We charge borrowers a Platform Fee only when their loan application has been approved and fully funded at settlement.

The Platform Fee is between 1% to 3.5% of the total approved loan amount and is dependent on the borrower's Zagga Credit Assessment Score . Borrowers have the choice of paying the Platform Fee from their own funds, or deducted from the settlement proceeds, or capitalised to the loan.

Generally, if a loan is not approved, or is withdrawn before it is fully funded then no fees will be charged to the borrower. If you withdraw your loan after the loan is approved and fully subscribed by investors and before settlement of the loan, then 75% of the Platform Fee will be payable to recover our costs.

Also, we may, at our discretion, request payment of a deposit to cover legal and property valuation fees prior to the loan being assessed. This deposit will be offset against the Platform Fee if your loan settles, but will be retained to cover fees incurred by us to our solicitors or other third parties where you withdraw from the loan before settlement. In certain circumstances, an introducer's fee may apply, in which event, we will disclose these details to you.

After settlement, additional fees and charges apply, including penalty interest and default fees charged to borrowers who are late with their contractual repayments, and for unregulated loans an Early Repayment Fee may apply if you repay your loan in full before the agreed loan term.

For more information, please refer to Borrower rates and fees.

Can I repay my loan early?

Yes you can, however you may be subject to an Early Repayment Fee for loans not regulated by National Credit Code. Please refer to the Borrower Agreement for more information, or call us on 1300 1 ZAGGA to discuss.

What happens if Zagga goes into liquidation?

Zagga is required by the Australian Securities and Investments Commission to have a plan in place in the unlikely event of Zagga going into liquidation. In this scenario, a third party would be appointed to oversee the administration of all existing loans. For borrowers, nothing would change. You would still be required to meet your repayments and commitments as per usual.

Can I change the terms of my loan?

No, once your loan is settled and active you cannot change its terms.

Can I change my repayment dates?

No, your repayment date will be on the same day each month, based on the date of the initial loan advance. However, if you are struggling to make repayments we urge you to contact us immediately on 1300 192 442.

How many loans can I have?

You can apply for more than one loan, and may make loan applications in different entities in which you are a party, say, a Family Trust. However, every loan application is treated on its merits and must be secured by eligible assets.

Your overall financial position and expected ability to service each loan will be carefully scrutinised and Zagga will include its determinations in your credit score, the interest rate and Platform Fee assigned to each loan.

It is unlikely that you will be approved for multiple, concurrent loans.

What happens if I make a late repayment or miss a repayment?

We take a proactive attitude to managing repayments. In the days prior to a repayment we will contact you to remind you that it is due. If you can't make a repayment on the due date you must contact us immediately. If you miss a repayment we expect you to pay it as soon as possible. As long as you make up this repayment quickly it will not affect your credit record.

You will be charged default interest on any repayments that becomes overdue. Other fees and charges may also apply. If you don't pay the amount owed or continue to default on your repayments, we will send your account to our debt recovery team who will rigorously pursue the debt.

Zagga may take legal action against you to recover the debt. This may include the sale of the security held by the appointed trust and obtaining judgement against you.