personal loans a cheaper option but australians still choose credit cards

Sydney, 20 May 2008: One-third of Australians are still choosing to use their credit cards for large purchases, even though a staggering 55 per cent believe personal loans are a cheaper option, a Citibank survey* has found

The national survey of 1000 people revealed that given the option to pay for large purchases of $3000 or over, 38 per cent of respondents chose personal savings, 33 per cent selected credit cards and just 10 per cent opted for a personal bank loan, despite lower interest rates.

The research coincides with the launch of Citibank’s new personal loan, which gives applicants a response within just one minute, the ability to form the loan contract online and if successful, receive their cash within 48 hours.

Jacqueline Nissen, Head of Consumer Lending, Citibank said, “Our research highlighted the two most important factors when people are looking to take out credit are rate and the ease of the application process”.

“More and more customers are choosing to take out a personal loan because of the savings they can make but people still rely on their credit card because it’s quick and convenient,” Mrs Nissen said.

Citibank is believed to be the first Australian bank to allow customers to enter into a loan contract online, both securely and easily, meaning customers will know within minutes, rather than days, if their loan application has been successful.

“Citibank’s one minute personal loan debunks the public’s perception of lengthy application processes and excessive paper work and importantly, we haven’t compromised on lending security,” Mrs Nissen said.

When asked the most important factors for taking out a personal loan; interest rates were number one, ease of application process second, followed by speed of decision and cash. Brand was ranked as the least important factor when selecting a personal loan.

Other key findings from the research included:

Preference to use credit cards to make a purchase over $3000 was highest in NSW 35%, VIC 34% and QLD 29%

Preference to take out a personal loan was highest in TAS 25%, WA 14%, SA/NT 12% - QLD was the lowest 7%

Preference to pay with personal savings was highest in WA 47% and lowest in NSW and VIC both 36%

20% of people think a credit card is cheaper than a personal loan when making a large purchase

96% of people stated speed of application process was important

“At Citibank we’ve tried to remove the barriers to personal loans thanks to a competitive rate, instant application and cash in your hand within 48 hours,” Mrs Nissen said.

More details of the Personal Loan product please click here.

Important Note:

Issuer: Citigroup Pty Limited ABN 88 004 325 080, AFSL 238098 (“Citibank”). Terms and conditions apply and are available upon request. Fees and charges apply. All loans subject to Citibank’s credit criteria.

*The Citibank Personal Loan survey was conducted by Taylor Nelson Sofres in April/May 2008. The national survey involved 1000 people.

FACT SHEET May 08

Citibank Pty Limited – The Citibank Personal Loan - Australia’s fastest loan

Overview

The Citibank Personal Loan is a form of unsecured credit available to customers in a flexible and cost effective way. The product is structured to enable fixed monthly repayments so customers can manage their finances.

The Citibank Personal Loan was developed to offer customers the ability to tailor the loan to suit their needs from the flexibility to choose the loan amount and term, through to a redraw option on advance repayments. A competitive fixed rate enables customers to budget with the security and structure of regular, fixed repayments.

The purpose of this loan is for personal use.

Loan amounts range from $4,000 to $75,000 and are available for periods of one year up to five years. The amount is dependent on each customer’s situation and their capacity to repay

What is Citibank's new application process?

The Citibank Personal Loan uses an Australian-first application process that is entirely online. The new application process gives applicants a response within one minute, and if approved, successful applicants receive their loan payment within 48 hours.

The faster delivery is possible because Citibank has created a process where customers can legally enter into a loan contract online by signing an electronic contract, and faxing their supporting documentation, allowing them to receive their loan payment within 48 hours.

Customers no longer need to visit a branch or wait for Citibank to mail a paper contract for them to sign, removing many of the time-consuming elements of the previous application process.

How can Citibank provide an answer in just one minute?

Citibank has reengineered the entire personal loan process to be online, quick and easy.

Citibank’s robust credit criteria, diligence and security check procedures remain exactly the same. The only difference being that Citibank is able to provide a response on the application back to the customer within one minute.

The key difference in Citibank’s new application process is that customers now have the ability to enter the loan contract online. Customers no longer need to visit a branch or wait for Citibank to send them a paper contract to sign.

This means that Citibank is able to discharge funds to customers within 24 hours and customers can receive their loan within 48 hours.

How do potential customers apply?

Applicants need to complete an online application form, and then they receive a response just one minute later. Upon receipt of their response, customers then choose their preferred loan terms and amounts.

Once the customer is satisfied with the loan, they can electronically accept the contract online, forward their supporting documentation via fax, and receive their funds within 48 hours.