‘Wrap’ lenders free to trade in most states
The NSW Government said it would not follow the lead of Western Australia and South Australia and outlaw a loan practice known as “wrap finance”, in which little-known property investors selling properties provide vendor finance to buyers. Wrap finance is often promoted as a get-rich-quick method on tabloid television. The loans are similar to a hire purchase loan and title does not pass to the home-buyer until the last payment is made. Wrap financiers charge above-market interest rates, sell properties at well above market value and employ aggressive collection practices.