Why Collection House Limited (ASX:CLH) is expanding into consumer credit

Collection House Limited (ASX: CLH) announced on Thursday that its wholly owned subsidiary ThinkMe Finance has obtained a full credit licence from the Australian Securities and Investments Commission.

ThinkMe used to be a finance broker, an intermediary helping retail customers with their loan applications, but with the new credit licence it will be able to provide loans directly to consumers.

The company is ready to enter into the consumer credit sector, having a digital portal for applications and a tested approval process already in place, with the possibility of tapping into the Collection House’s network.

The expansion of ThinkMe can deliver synergies with other companies in the Collection House group specialising in debt recovery. ThinkMe will allow Collection House customers to refinance their debt and repay their defaulted accounts, making instalments more manageable and offering an interest rate well below the legislated caps. Furthermore, ThinkMe will enable them to rehabilitate their credit record, by reporting their on-time payments.

The company will provide more details in the full year results presentation, but today the announcement failed to excite investors. At the time of writing, shares were 0.5% down to $1.54.

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Motley Fool contributor Tommaso Autorino has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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