What is a car finance broker?

Finding competitive and flexible finance through a car broker can save time and money.

What is a car finance broker?

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

LenderProduct NameAdvertised RateComparison RateMonthly Repayment
Savvy New Car Loan 2.99%
fixed
3.36% $538.93
Bank of Australia Used Car Loan 6.45%
variable
6.66% $586.28
ANZ Online Secured Car Loan 7.85%
fixed
8.70% $606.14
CUA Fixed Rate Car Loan 7.99%
fixed
8.29% $608.15
BankSA Secured Fixed Personal Loan 8.49%
fixed
9.39% $615.35
St George Secured Fixed Personal Loan 8.49%
fixed
9.39% $615.35
CBA Secured Car Loan 8.49%
fixed
9.54% $615.35
NAB Variable Rate Personal Loan 14.19%
variable
15.06% $701.01

* Commercial loan with the loan amount of $40,000 is looking at a 5 year secured fixed rate of 2.85% p.a. and comparison rate of 3.93% p.a.. WARNING: all fees and charges may not be included on the example above, only the comparison rates, monthly repayment and total cost applies. Therefore, the total cost of the loan might be different. Comparison rate do not include broker fees, redraw fees, early termination fees and fee waivers. Comparison rate may change as a result of the different loan terms, fees and the loan amounts. Establishment fees and monthly fees do not apply to commercial loans, only consumer loans. However, there might be different fees apply.

Why choose Savvy?

Savvy is consistently among the top brokers in Australia when it comes to trust and value.

Our dedicated spotlight on car finance brokers

A comprehensive guide to car finance brokers and how they can help you in your car loan search.

Simplify and speed up the research process with a car finance broker

Buying a car is a major financial decision. Getting your finance sorted should be a research-intensive process, where you set your budget, figure out how much you can afford in repayments, and find a loan that suits your needs. However, with thousands of loan products on the market, it could take you weeks, if not months, to sort through all the different alternatives before you find one that suits. In most cases, you’ll choose one that costs you more or has fewer features than another loan on the market.

A car finance broker works for you in finding a car loan deal that suits your budget, needs, and set of features. This could be finding loans if you have bad credit, need pre-approval, a balloon payment, or any other type of specialised loan such as one for auction-based car sales or chattel mortgages for business.

Brokers have access to what’s known as a lending panel. A lending panel is a range of lenders or banks that offer their products to the broker. The broker, depending on how they operate, look for loans that suit the budget and needs of the applicant. This can be done manually, through a computer, or with the aid of artificial intelligence. The lending panel will return their available products, which the broker will present to the applicant.

A broker is an intermediary between a car buyer and a lender and handles all the paperwork and application process on the car buyer’s behalf.

Fees and charges with broking

Some brokers may charge a fee for their services, which is included as part of the loan. This may be expressed as a comparison rate. A comparison rate is the base interest rate and most fees and charges associated with the loan expressed as a percentage.

Other brokers may not usually charge a fee for their services, as some make commissions from the lender for selecting their product. This also means there’s no “penalty” for using a broker over approaching a lender or dealer financier.

A good broker will be upfront with their fee structure and how this plays into your repayments.

Car loan brokers and insurance brokers – a one-stop shop

Some car finance brokers are also car insurance brokers. Many consumer car loans require the car buyer to purchase comprehensive car insurance as part of the loan agreement.

Some car insurance brokers also offer GAP (Guaranteed Asset Protection) insurance, which protects the car owner if the car is stolen or written-off before the loan is fully paid off. The insurance pays out the remainder of the loan in that case.

Car insurance brokers work in the same way as car finance brokers; they have an insurance premium panel which connects your car insurance premium with available products on the market.

Advantages of getting car finance through a broker

Why looking for car finance through a broker is better than going it alone

  • Saves time: A car loan broker shops around for available loans in your price bracket, which saves time on research and approaching lenders
  • More choice: Car loan broker lending panels have dozens of choices, which means more competitive rates and products
  • Better flexibility: With more choice comes more flexibility; get a loan tailored to your needs
  • One-stop shop: Some car loan brokers give you the option to find a cheaper or more fully featured car insurance premium
  • Support and guidance: A broker is your advocate in getting a car loan, and answers all your questions

We answer your questions about car finance broking

All the most frequently asked questions about car finance broking answered in our guide.

What is the main difference between a car finance broker and a lender?

A car finance lender is a financial institution that lends money out to people so they can buy a car. A broker does not lend money out but connects people who are buying a car to a lender. Brokers are connected to many lenders, which increases choice and makes for more competitive rates.

What is a lending panel?

A lending panel are the banks or lenders that brokers have access to when shopping around a loan on behalf of a customer.

Do car finance brokers also get loans from dealers?

A comparison rate is an interest rate that includes most fees and charges stated as a percentage per annum. You can compare similar loans using a comparison rate table.

How do I get my credit history?

No. Car finance brokers only find loans from banks or non-bank lenders.

What’s the difference between a car broker and a car finance broker?

A car broker is a service which finds cars and purchases them on behalf of a buyer. Some car loan brokers also offer car loan broking services, but the two services are separate.

I have bad credit, can I use a car loan broker?

Yes. Car loan brokers often help bad credit customers find competitive car loans from their lending panel.

Can business customers use a car loan broker?

Yes, car loan brokers also access business lenders and specific loans for business such as chattel mortgages and hire purchases.

What documents will I need to show the car loan broker?

You will need the same kind of documents you would show a broker. This includes 100 points of government-approved ID, proof of income, proof of residence, and any other supporting documents.

Can I apply with a car loan broker online?

Yes, you can begin the process with a car loan broker online. A consultant can also assist you through the process.

How do I know my broker is trustworthy?

All brokers need to have an Australian Credit Licence (ACL) to provide credit products. You should also check online reviews to make sure they’re a good fit for your situation.

How do I come up with a budget?

You can use a car loan calculator. This will show you how much you could afford in repayments each week as an estimate. You’ll need to know how much you want to borrow, your interest rate, and your loan term.