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5 Benefits Of Using A Car Loan Broker To Finance Your Next Car

Chris Hopkins
Nov 23, 2021 5:01:59 PM

So you want to buy a new car? We all love the fresh new car smell and the feel of brand new wheels. However, financing a new car is not an option for a lot of us. Australians spend an average of $40,128 on their new car—a sum of money that's not just sitting in the bank for most people.

That begs the question, how do you finance your next car? Well, luckily we're here to introduce you to using a car loan broker in the future. We'll run through the benefits, potential downsides and how you can take advantage of this strategy.

Table of Contents 


What is a Car Loan Broker?

A car finance broker is essentially the go-between in the middle of you and the lender. They are responsible for finding you the best possible deal by researching lenders and loans that are best suited to your needs, budget, and situation

Yes, it might seem more straightforward to approach the bank directly. However, using a car finance broker will provide you with more loan options and save you more money down the road. You also increase your chances of getting approved for a loan as they understand the lenders' eligibility criteria.

What Does a Car Loan Broker Do?

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So, what do car loan brokers do? They are fundamentally there to help you get the best car loan deal you possibly can to finance your next car.

Typically, a car loan broker will work with a ‘panel’ of lenders including banks and alternative loan providers to source you the best finance rates and options for your circumstances. The best car loan brokers like Ausloans have strong relationships with multiple lenders and have an intimate knowledge of each lender's finance products. 

As they are experts, they have a better chance of finding the perfect loan plan to help you save money. They are particularly crucial if you have a bad credit history or are self-employed. Many banks will turn you away at the first step, however, a car loan broker will know how to negotiate on your behalf to get you approved.

Can A Broker Help Me Get A Car Loan?

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Yes—if you're struggling to find a car loan that you can reasonably afford, a car loan broker will assess your credit profile and offer you expert advice on exactly what you can and cannot do. They are experts in their field and will warn you about potential things to watch out for to get the best loan terms.

Offering more than just financial support, your car finance broker will assist you through every step of the car loan process, making it hassle and stress-free. You can usually save hundreds, if not thousands, by enlisting the help of a professional.

Is it safe to use a car loan broker?

Worried about your personal information, security, and getting the best deal? Don't stress every broker is legally required to be accredited by the Australian Investments and Securities Commission with an Australian Credit Licence. This means that they are bound to help you get the best service possible.

Car finance brokers, just like banks, are bound by their credit license to follow the “three pillars” of responsible lending, which are:

  • Making reasonable inquiries about your financial situation,
  • Verifying your details to ensure the information presented is accurate.; and,
  • Determining if your financial situation can support the loan you are asking for.

How Do Car Loan Brokers Differ From a Car Lender?

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While a broker is a person who negotiates a good loan deal on your behalf, the car loan lender is the one offering you the money to pay for your car. Lenders are usually part of a bank or loan company and offer various loan options.

To view the full range of car finance options available, including those for businesses and ABN holders check out our car loans guide. Here you will find detailed information on the full range of car loan options offered by lenders.

Benefits Of Using A Car Loan Broker?

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A car loan broker is sure to find the best deal for your loan, saving you from paying the total cost of the car upfront. There are many loan products and different comparison rates that confuse a lot of people. We can't all be experts at running through all the loan terms to find the right car loan.

Using a car loan broker will eliminate the stress and confusion of finding the ideal finance options for your new car.

Access Multiple Lenders and Get The Right Deal for You

You might know what secured, unsecured, low doc, and balloon payment car loans are, but how does anyone know which is the best option for them? Yes, they all have their benefits, but does it suit your financial situation or your lifestyle?

A car broker will assess your circumstances and recommend the best option. . Car loan brokers are also able to assist customers with the application process, which can save time.

The broker will also be able to offer financial advice on interest rates, cash flow requirements, and different finance products. 

At Ausloans we have access to multiple lenders. No matter what your situation is, your broker will know the different lenders who can offer the best loan options to you. We are also able to help you with pre-approval for your loan, assist with paperwork and help you find the right car as well.

Soft Searches Only - Car Loan brokers Help Protect your Credit Rating

An unexpected impact of personally asking around for quotes from different lenders is that some of them will conduct hard searches on your credit score.  Every time you apply for a loan directly with a lender it impacts your score and affects your ability to get a loan or quote from a different lender.

A car broker will ensure that only soft searches are done and only when the right lender has been found and agreed upon by you, will the loan be submitted to a lender. 

Save Time

Not only do you save yourself stress and money with car finance brokers, but you are likely to also save yourself a vast amount of time.

The marketplace for car loans is crowded, and with so many options available sorting through them can be both daunting and time-consuming.  

Doing the research yourself could take you weeks but an Ausloans car loan broker can do the legwork for you in minutes. Our loan assessment software can deliver you the best loan options and rates in minutes, without damaging your credit score.

Financing a car doesn't have to be such a time-consuming process.  Using the right car broker, you could be driving your new car within a few days of making your application.

Get Support

Your broker isn't just there to find you a good interest rate and flexible payment options. Beyond negotiating on your behalf, your broker will assist you in finding your perfect car, help you prepare your supporting documents and, offer tax advice.

If buying a new car fills you with apprehension, using a car broker might transform your experience and save you from making the wrong deal.

Find Bad Credit Car Finance

If you have bad credit, it can be hard to know who to approach. It is commonly thought that lenders won't offer loans to anyone with poor credit. Indeed, there are many banks and loan companies that refuse to offer money to someone with unfavorable credit or offer a loan on bad terms.

However, a broker knows the lenders that will offer a loan amount to you, despite poor credit. Your broker will talk you through your different options and get you driving again as soon as possible. Bad credit doesn't have to stop you from buying a car.

Who Should Use A Car Loan Broker?

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Ideally, everyone should use a car loan broker. Not only does it save time for the car buyer, but also for the dealership. As brokers know the ins and outs of the lender's policies, they won't waste their time with applications that won't be approved.

Using a broker is particularly helpful for someone with a poor credit score. They will know which lenders are more amenable to bad credit finance, saving you the hassle of researching yourself.

Plus, if you're using your car for business, a broker will help you get the ideal loan for your business structure; Commercial loans include a chattel mortgage and a novated lease.

Car Financing Tips

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Before approaching a car broker, keep in mind some tips on what you should do to prepare yourself to begin your loan repayments.

Keep The Loan Term As Short As You Can Afford

A shorter-term loan means higher payments. However, the longer your loan term, the more interest you build up. Consult with financial advisors about how much you can reasonably afford for monthly repayments. 

Not everyone can afford to make huge payments each month, but the more you can pay off early on, the more money you save yourself overall.

Put Down The Biggest Deposit You Can Afford

Similarly, a significant deposit often gets you a better deal. Not only do you knock off a sum of the initial purchase price, but you convince the lender that you are responsible with your finances. Therefore, they might be more willing to offer you lower interest rates and certain benefits like fee waivers.

If you're thinking of purchasing a new car, start saving up for a deposit. It is usually recommended that you save about 20% of the car's purchase value as a downpayment. For example, if your desired car costs $25,000—then think about saving about $5,000.

However, if you're not sure about your ability to save a hefty deposit, or are not sure if it is the right financial choice for you, don't worry. 

Ausloans lenders offer no deposit loans. If you qualify for no deposit finance, you will pay back 100% of the purchase price in the monthly repayments. Speak to your broker about your no deposit options.

Pros And Cons Of Using A Car Loan Broker?

We've already established the vast benefits of using a broker to assist your car purchase. They make your life stress-free, saving you vast amounts of time and money. However, there are a few downsides to using a broker that you should be aware of ahead of submitting your application.

Fees And Charges With Broking

Brokers, like all service providers, charge fees for their services.. While these are usually included in your contract, you should make sure to check what you will owe them before enlisting their help.

Typically, however, the broker will save you so much money on your car finance that any costs for their assistance are negligible.

How To Choose A Car Loan Broker?

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So a broker takes the effort out of choosing a dealer, however, you still have to choose the right broker. First thing's first, you have to make sure that your broker has an Australian credit license. If they cannot reassure you that they are licensed, walk away. Only approach brokers that are fully licensed.

Luckily, it is not too difficult to find a broker. At Ausloans, all our brokers are experienced and dedicated to helping you. Even better, we have brokers right across the country—search our online database to find the perfect car loan broker. Simply choose your state and follow the steps to contact your local professional broker or alternatively try our simple 2-minute application. We offer fast, paperless online applications and usually respond to your application within a few hours.

Frequently Asked Questions

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Now you know what a car loan broker is and why you should use one, let's get to some commonly asked questions.

What Documents Do I Need To Show A Car Loan Broker?

You will typically need to show your broker all the required documents that you need for a loan. This usually includes:

  • Proof of income to ensure that you can afford each monthly repayment.
  • Proof of residence.
  • Proof of insurance—many lenders require you to have comprehensive insurance on your car. Your broker will assist you with this if you desire.
  • Identification, such as a passport.
  • Credit and financial history so your broker knows your circumstances.

Can I Use A Car Loan Broker If I Have Bad Credit?

Yes. In fact, it is recommended that you approach a broker ahead of the dealership if you have poor credit. As discussed above, a broker will know which lenders are happy to offer loans to people with poor credit.

Review Your Credit Score

Review your credit score before you approach the broker so you can tell them your situation upfront. A good credit score might get you higher value loans and better interest rates on your vehicle loan. It might also impact what car you buy, as a better credit score will more likely help you fork out enough money for a high-end car.

Can I Use A Car Loan Broker To Finance A Second-hand Car?

Most dealers are happy to offer car loans for both new and second-hand cars. A used car is often a better way to get on the road for a lot of us—provided you look for one from a reliable dealership and with low mileage.

Usually, the loan terms are the same for both used cars and new cars. Speak to your broker about finding a suitable loan for your second-hand car or check out our car brokering service. We can help you find the perfect vehicle and arrange to have it delivered to your door. 

Can I Get Pre-Approved Finance From A Car Loan Broker?

The simple answer is yes and we highly recommend organising your finance approval before you begin your car shopping. 

Pre-approved finance offers from lenders are valid for between 30 and 90 days depending on the lender, which gives you ample time to find the perfect vehicle for your needs.

Next steps

Ready to get started? Simply click on the banner link below to complete a simple online application and one of our professional car finance brokerage team will contact you to walk you through your options. 

Ausloans fast approval car loans

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