A car finance broker or a car loan broker is an accredited individual or company that has access to a range of lenders to help people find a car loan that suits their needs. Instead of seeing just one lender with their own loan products, brokers can look for loans from many different and independent lenders at the same time. Brokers can save money and time for people looking for car loans as they search for the best deal on the car buyer’s behalf. They can also look for competitive rates and terms for bad credit customers, loans with pre-approval, and for business customers looking for a car loan.
How a car finance broker could help your credit score
Every car loan broker in Australia should be accredited by the Australian Investments and Securities Commission (ASIC) with an Australian Credit Licence (ACL.) A broker’s ACL shows consumers that they follow responsible lending rules as laid out in the National Consumer Credit Protection Act 2009.
You can check a broker is accredited using the ASIC Register. If your broker is not accredited, walk away.
According to the Act, credit licensees “must not enter a contract with a customer, suggest such a contract, or assist a customer to apply for a credit contract if that contract is unsuitable for that customer’s situation.”
This means that a broker, once they have made a preliminary assessment of your creditworthiness and find that a loan is not suitable for your financial situation, should not approach their lending panel and submit your details for an application. The lender will make a credit check and could reject your application, which has the potential to harm your credit score.
Brokers should adhere to the “three pillars” of responsible lending, which are:
- Making reasonable enquiries about an applicant’s financial situation,
- Verifying or checking their situation is as they describe; and,
- Figuring out if their financial situation can support the loan they are asking for.
Brokers also must make sure the final loan contract is easy to understand. They also need to supply, in writing, their copy of the assessments if requested.
Estimate your loan repayments with our handy car loan calculator
|Lender||Product Name||Advertised Rate||Comparison Rate||Monthly Repayment|
|Savvy||New Car Loan||2.85%|
|Bank of Australia||Used Car Loan||6.45%|
|ANZ||Online Secured Car Loan||7.85%|
|CUA||Fixed Rate Car Loan||7.99%|
|BankSA||Secured Fixed Personal Loan||8.49%|
|St George||Secured Fixed Personal Loan||8.49%|
|CBA||Secured Car Loan||8.49%|
|NAB||Variable Rate Personal Loan||14.19%|