How Finance Brokers Work in Australia
A finance broker arranges loans on your behalf through a panel of banks and non-bank lenders. Brokers don’t lend money themselves. A broker reviews your situation and compares loans you’re likely to qualify for. Once you choose one, they handle the application through to settlement. In Australia, finance brokers must hold an Australian Credit Licence or be authorised under one.
Buying a car, truck or equipment? Here’s what an asset finance broker does.
What Does a Finance Broker Do?
A finance broker sits between you and the lender. They look at your income, your credit history and what you’re buying, then match you with lenders whose criteria you’re likely to meet. That means fewer declined applications and fewer hard enquiries on your credit file.
Once you pick a loan, the broker gathers your documents, submits the application and deals with the lender until the loan settles. You still make the final decision on which loan to take.
What Loans Can a Finance Broker Help With?
A broker compares options from their lender panel, so you see more choices than one bank can offer. At FLOW, that includes:
- Car loans and car finance pre-approval
- Caravan loans, boat loans and motorbike finance
- Truck loans and trailer finance
- Business equipment finance and farm equipment loans
- Asset finance and commercial loans
- Personal loans, including loans for people with bad credit
See the full list on what you can finance.
When should you use a finance broker?
Before selecting a finance broker it’s important to understand why you should use one. If you have a complicated situation, such as a low credit score, or if you want to refinance a personal loan with better terms than your bank can offer, then it might be worth looking into getting advice from a professional. A good broker will be able to help guide you through the process and find the best loan available for your needs.
If you’re having trouble with your existing broker or need some advice on what type of product would suit your needs then seeking out an expert may be useful. There are many lenders out there who provide funding but not all of them are created equal and finding one that suits all parties can sometimes be tricky especially if they don’t match up with certain requirements such as age brackets or income level limits set by regulators such as ASIC (Australian Securities & Investment Commission).
How to choose a finance broker
Choosing a finance broker is an important decision, as it can have a significant impact on your financial health and well-being. First, you should make sure that the loan broker you choose has a good reputation in the industry. You can check this by looking up their website and social media pages to see what kind of feedback they’ve received from past clients.
Another thing you should consider is the accreditation status of your broker. This will ensure that they are legally allowed to engage in credit activities in Australia, so make sure that your broker is properly licensed before signing any contracts with them!
An ethical finance broker will also protect your credit score throughout the process of applying for a loan by making informal enquiries about your unique situation before submitting your application formally to a lender. Ask any broker how their process works before you start. Here’s how our application process works.
How do finance brokers get paid?
You may be wondering how finance brokers make money. Well, they get paid a commission by the lending institution (typically a bank or other lender). The commission is usually a percentage of the loan amount. Because brokers place a high volume or loans, some lenders give them access to wholesale interest rates that aren’t advertised to the public.
Finance Broker vs Bank: What’s the difference?
A finance broker can assist you in finding the best loan for your needs and circumstances, including whether you are looking for a car loan or commercial loan. A broker will ensure that you understand the different types of loans available to you and work with you to find the most suitable one for your circumstances.
In most cases, brokers do not charge any fees until after the loan is approved and settled. The amount differs depending on market conditions at time of application. If a broker charges an upfront fee they will tell this either before they start working with you or immediately after taking your details over the phone when discussing what type of loan suits your needs best.
We cover more about choosing a broker vs bank in another article.
Want to chat to a trusted finance broker about your borrowing needs? The team at FLOW Financial would love to help. Get in touch!