Written by 
Reviewed by 
- The Savvy Promise
At Savvy, our mission is to empower you to make informed financial choices. While we maintain stringent editorial standards, this article may include mentions of products offered by our partners. Here’s how we generate income.
Buying a car often involves taking out a car loan. But navigating the world of lenders and loan options can be tricky. That's where car finance brokers come in. Find out what they do and how they could help you right here with Savvy.
What is a car finance broker?
A car finance broker or a car loan broker is an accredited individual or company that acts as a middleman between the borrower and lenders (such as banks) to help the borrower find a car loan that suits their needs. With access to a wide range of loan options from their lending panel of financial institutions, brokers will search for the best deal on the car buyer’s behalf, saving them both money and time on the loan. Whether you are purchasing a new or used car, working with a car finance broker can simplify the financing process and ensure that you secure the most favourable terms for your car loan.
What is the difference between a car finance broker and a lender?
While both car finance brokers and lenders play essential roles in the vehicle financing process, they have distinct functions:
- Car finance broker: acts as an intermediary, working for you, the borrower. They search a network of lenders (banks, credit unions, etc.) to find the best loan option based on your needs and financial situation.
- Lender: a financial institution like a bank or credit union that offers its own car loan products. They assess your eligibility and offer you their loan terms (interest rate, fees, etc.).
Is a car finance broker the same as a car broker?
No, despite the similar titles, car finance broker and car broker are separate roles providing different services. While a car finance broker specialises in securing financing for the purchase of a vehicle, a car broker focuses on helping buyers find the right vehicle itself. Car brokers find cars that meet their clients’ needs and specifications, negotiate prices and facilitate the purchase process. There may be overlap in services – some car brokers can assist with financing arrangements and some loan brokers also offer car broking services – the primary focus of each is distinct.
In short, a car finance broker helps you find the best loan for your car, while a car broker helps you find the best car for your budget.
How can a car finance broker help me?
There are a number of advantages to using a car finance broker in Australia:
- Access to a wider range of loans: brokers have established relationships with a network of lenders, including banks and finance companies. This provides you with more choices and better potential for finding a loan that suits your individual needs and financial situation.
- Expertise in comparing and negotiating: brokers possess in-depth knowledge of the car loan market and are skilled in comparing different loan options. They negotiate with lenders on your behalf to secure competitive interest rates and favourable terms, potentially saving you money.
- Guidance through the application process: the car loan application often involves extensive paperwork. Brokers provide clear guidance, ensuring you complete all necessary forms accurately and efficiently, streamlining the process.
- Explanation of complex loan terms: brokers will explain and clarify any areas of confusion, such as fixed vs variable interest rates, balloon payments and repayment options. This empowers you to make informed decisions based on your financial goals and risk tolerance.
- Time and effort saving: brokers handle the legwork of contacting multiple lenders and comparing loan options, saving you valuable time and effort. They can also expedite the approval process, potentially getting you behind the wheel of your new car sooner.
How do I choose a car finance broker?
When choosing a car finance broker in Australia it’s important to find a reputable and reliable professional who can meet your specific needs. Here are some key considerations:
- Credentials: ensure the broker holds a valid Australian Credit Licence (ACL) issued by the Australian Securities and Investments Commission (ASIC). You can verify their license details on the ASIC Connect website. Accredited brokers adhere to industry standards and ethical practices, providing you with peace of mind throughout the financing process. If your broker is not accredited, walk away.
- Experience: consider the broker's experience and expertise in the car finance industry. A seasoned broker with a proven track record of success is more likely to have the knowledge and connections needed to secure favourable loan terms on your behalf. Ask about their experience working with clients with similar financial profiles and loan requirements.
- Communication and transparency: choose a broker who communicates clearly and transparently, keeping you informed at every step of the process. They should be readily available to answer your questions, address concerns and provide regular updates on your loan application.
- Fees and charges: enquire about the broker’s fee structure and any additional charges associated with their services. While some brokers charge a flat fee or commission, others may receive compensation from lenders for referring clients.
- Reviews and recommendations: check online review platforms and ask friends or family for recommendations on reputable car finance brokers. This can provide valuable insights into the broker’s professionalism, reliability and customer service.
How can I get a car loan through a car finance broker?
Here's an overview of the typical steps involved in securing finance through a broker:
- Initial consultation: contact your chosen broker for an initial consultation, typically through an online form or by phone. During this meeting, you'll discuss your financial situation, credit history and loan requirements as well as details about the car you are interested in. They may also run a soft credit check, which will give them an idea of your credit score but will not affect it.
- Documentation gathering: the broker will request documents to verify your financial situation and identity. These may include proof of income (payslips, tax returns), driver's licence, Medicare card and bank statements.
- Loan options: the broker will assess your needs and financial profile then search for suitable loans from their network of lenders. They will then present you with your options.
- Loan application: when you’ve chosen a loan option, the broker will help you complete the application. They will ensure all required information is accurate and complete before submitting it to potential lenders.
- Lender checks and approval: the lender will assess your application and conduct credit checks. Your broker will liaise with lenders on your behalf. They'll provide updates on the status of your application and communicate any additional requirements or documentation needed.
- Settlement: once the loan is approved, you'll need to review and sign the loan documents prepared by the broker. They'll guide you through the paperwork, ensuring you understand the terms and conditions of the loan. Upon completion, the broker will arrange settlement with the lender and facilitate the transfer of funds to the car seller or dealer.
Can a car finance broker help me if I have bad credit?
It can be difficult to get a car loan with bad credit or a low credit score. However, it can be worthwhile using a car finance broker to explore your options. Here's why:
- More lender options: brokers have established relationships with various lenders, including some who specialise in loans for borrowers with less-than-perfect credit histories. These lenders may have different criteria and be more flexible in their assessment.
- Guidance and support: throughout the loan application process, car finance brokers provide guidance and support to help you navigate any challenges related to your credit history. They explain your options, address your concerns and advocate on your behalf to increase your chances of loan approval.
- Alternative loan options: brokers can explore different loan options that might be suitable for you, such as secured loans (using an asset as collateral) or loans with a higher interest rate but a smaller down payment.
- Protect your credit score: when a broker searches for loan options, they typically use a “soft enquiry” that doesn't leave a negative mark on your credit report. The broker in a sense acts as a filter, presenting you with the best options from lenders more likely to approve your application, minimising the risk of a damaging rejection with a hard credit check. Brokers also ensure all documentation is complete and accurate before submitting an application, which reduces the chances of errors that could lead to rejection and harm your credit score.
If you are looking for help with your car finance, turn to Savvy. Our team of experienced brokers works with a panel of more than 40 lenders throughout Australia, enabling us to find a loan solution tailored to your needs. With our expertise and extensive network, we streamline the process, helping you secure the right loan quickly and with minimal hassle. Get started today.
Did you find this page helpful?
This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.
The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.
Approval for car loans is always subject to our lender’s terms, conditions and qualification criteria. Lenders will undertake a credit check in line with responsible lending obligations to help determine whether you’re in a position to take on the loan you’re applying for.
The interest rate, comparison rate, fees and monthly repayments will depend on factors specific to your profile, such as your financial situation, as well others, such as the loan’s size and your chosen repayment term. Costs such as broker fees, redraw fees or early repayment fees, and cost savings such as fee waivers, aren’t included in the comparison rate but may influence the cost of the loan. Different terms, fees or other loan amounts may result in a different comparison rate.
