Statements

Sending out a loan statement for an Instalment Contract or Second Mortgage would, on the surface, seem to be a pretty straight forward thing to do.  It is but, with the advent of the National Credit Code, these statements have got to contain a prescribed list of information and be sent out at regular intervals.

These and other requirements are set out in Division 5, ‘Credit provider’s obligation to account’, of the National Credit Code. Click here to read Division 5.  It’s worth the read because these eight pages list some ‘serious’ penalties for non-compliance.

A quick overview of the requirements for loan statements are:

1.  The Statement must contain:
Statement period
          Balances
          Credit provided
          Identity of supplier
          Interest charges
          Fees and charges
          Payments to or from account
          Amounts payable by debtor
          Insurance payments  (if any)
          Alterations  (if any)
          Other  (if any)

2.  For Instalment Contracts and Second Mortgages you are normally required to send out a Loan Statement at least every six months.

3.  The opening balance of a Loan Statement you are about to send out must not exceed the closing balance of a previous Statement.

As with rental properties, where a lot of landlords use property managers to manage tenancies, a lot of Vendor Financiers are now using management companies to administer their vendor finance transactions.  These management companies start administering the transaction upon the buyer taking possession and carry out a full range of services from setting up direct debits, to sending out Statements and even dispatching arrears notices as required.

As our portfolio grew, we found administering our loans started to slow down our vendor finance business, so we setup Vendor Finance Management Pty Ltd (VFM) to outsource our administrative burden.  Details of  VFM’s services can be viewed here.

Cheers,  Paul

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