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Car Finance Brokers: What Are They?
January 11, 2021● 4 minute read●
Research for the best car finance options with the most ideal rates can be very time-consuming, especially if you have no clue to what you’re doing. Luckily, they’re professionals whose jobs are to make this process easier for you. Who are they and why should you use them?
Who is a car finance broker?
A broker is generally someone who acts as an intermediary and arranges a contract or agreement between two or more parties. Specifically, a car finance broker is a finance specialist who is accredited and has a relationship and access to different lenders to help people search and find loans and finance options that best suit their financial needs.
A car finance broker is a key to getting the best rates and deals. You’ll probably just meet with one or two lenders to compare rates when searching for a loan on your own, but a car loan broker will meet with a range of lenders to negotiate and get the best option for you. They are more knowledgeable about the market and qualification guidelines, which makes it better for them to help you shop for a car loan.
They deal with people with a variety of circumstances. People with good credits and income might not find the need to consult with a broker since they have ranks to negotiate good rates on their own. But a car loan broker might be just what you need if you have bad credit or any other difficulty to getting approved for a loan. They’ll prepare your case and focus on your financial strengths before applying to a lender. Some car dealerships also have employees typically known as finance and insurance managers whose job descriptions match that of a car finance broker.
What’s the difference between a car finance broker and a lender?
A car finance broker is an independent party that acts as a middleman between you and the lender. The lender is the one who approves and gives out the loan. Car finance brokers do not give out loans but only help you save money and time by negotiating the best rates with a panel of lenders.
Car finance brokers will connect you to the best lender that fits your needs, but it is the lender who will borrow money to you.
Why you should use a car finance broker?
Help with your credit score
Some people find it difficult to qualify for a loan due to bad credit. A car finance broker can help out with this. How? You may ask. A broker asks about your current credit situation and matches you to lenders that can offer you a loan. They’ll gather information about the credit eligibility from a range of lenders and find one that can lend you money even with bad credit. You might not have access to the right information and might end up getting rejected and further damaging your credit score if you decide to do this on your own. It is always advisable to consult with a broker if you have bad credit.
Buying a car involves a lot of research into features that best suit your personal needs. This is without adding the stress of looking and applying for a loan. A car finance broker can take this burden off you. They have access to a panel of lenders they can browse through and submit your applications to the ones that match with your needs, so there’s less likelihood of being rejected. Doing this on your own will involve you filing a lot of applications and filling in the same details repeatedly on different sites. The car finance broker will do this hard work on your behalf, saving you a lot of stress and time. They can either match you to lenders manually or with the use of artificial intelligence.
They’ll also help your sort through your finances and set up a budget that can work for you. It takes time to do enough research to find out how much you’re to pay monthly with each lender. The car finance broker helps you gather these details and calculate the fees and loan repayments of lenders that fit your financial need so you can make the final selection decision.
More choice and flexibility
Car loan brokers offer you more options to pick from. Instead of being put into a corner because of bad credit or low income, car finance brokers will help you break out of this corner by helping you find the best deals on the market for you. If you think you don’t have enough negotiating grounds on your own, it’s best to consult with a car finance broker. They also offer more flexibility with loan options specifically tailored to your needs. You also have more competitive rates since you have a lot of lenders on your list while working with a car finance broker.
Guidance and support
The broker acts not only as an intermediary but also as an advocate. They advise you on the best car choice to fit your financial need. They also help you prepare a case that features all your financial strengths before presenting to the lender. You can ask your broker any questions bothering you concerning the loan, and they’ll be there to put you through.
There is some information you need to know about a car finance broker before agreeing to work with them. The broker needs to be accredited in Australia so be sure to see proof of this. You should also ask about the fee. Some brokers charge no fee due to the commission they’ll receive directly from the lender, while others do. You also want to know how long the broker has been in business as this can mean more experience in the field. Longevity in the business can also mean better relationships with the lenders. Be sure to ask if the car finance broker works with multiple lenders, as this can increase the finance options you’ll have.
Written by Jacaranda Team