It’s generally recognised that it’s easier to start your journey into real estate vendor finance (VF) utilising Rent To Buys (Lease/Options) instead of Instalment Contracts or Deposit Finance. This is because Rent To Buys aren’t regulated by the National Credit Code and therefore you don’t need the coverage of an Australian Credit Licence.
The Market’s Always Changing
As one of Australia’s most experienced Vendor Finance lawyers wrote, “anyone serious about vendor finance cannot be a one trick pony – that is, do lease options only.” This is especially true when you consider how often our politicians like to change the rules regarding issues we work closely with, e.g. how and when stamp duty is charged.
Let’s imagine, for whatever reason, you decide your VF business needs its own Australian Credit Licence (ACL) so you can use Instalment Contracts and Deposit Finance. If this were the case, then ASIC is going to ask you for the details of a person in your business that has two years ‘prior experience’ in your area of consumer credit. That could easily put a two year delay in your ACL plans!
Don’t Get Stranded
A great way to avoid this frustration in your business is to have your ‘prior experience’ in your pocket, to be used when needed. This can be achieved by you or your company becoming an authorised Credit Representative of an ACL holder. Getting your Credit Representative number from ASIC will allow the clock to start ticking on the two years you need. Getting your Credit Representative (CR) number won’t be all you’ll need but it will allow you to claim any credit experience you gain while you are a CR.
As well as your two years as a CR, to round out your ‘prior experience’, we suggest you work on a few credit contracts with your Licensee (ACL holder).