Christopher Mitchell

Review of Prospa.

*** THE DEVIL IS IN THE DETAIL (ITS THE DAILY FE...

*** THE DEVIL IS IN THE DETAIL (ITS THE DAILY FEES!!) ***

Prospa is out there boasting about their benevolent service to the SME sector and at the same time being deliberately dishonest about the real cost of their loan product. If you do have a Prospa loan then you might want to consider the following before taking out another loan/redraw:

* Prospa (and other Fintech lenders) usually communicate the cost of the loan as a 'Factor' which is the same as the total interest payable expressed as a percentage of principal borrowed. A 'Factor' doesn't include processing and Direct Debit fees which are usually negligible relative to the scheduled repayment.

* Prospa and its competitors incur a cost of approx. $1 for each Direct Debit they draw from a borrowers bank account. Most lenders pass that cost on to the borrower in the form of a Direct Debit fee of say $3 to $5.

* Prospa do pass this cost on but unfortunately they do so in a manner that is just unconscionable.. A Prospa loan of $200,000 over a 12 month term means 260 daily repayments to be processed, and each of those includes a $45 fee passed on to the borrower. How do you justify passing on a cost you incurred as $1 but billing the customer for 45 times that?