Asset finance brokers
Could an asset finance broker save you money?
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An asset finance broker is a professional agent whose role is to assist their clients in procuring asset finance from a lender.
Asset finance brokers don't normally work on behalf of a specific finance provider – their role is to employ their niche expertise to negotiate the best deal possible for the circumstances of the individual. Some asset finance brokers may charge their clients directly, while others may not charge clients for their services but instead receive commission from providers upon a finance settlement (some may do both).
What services do asset finance brokers provide?
There are a number of services that asset finance brokers usually provide. These include:
- Advising their clients on policies that will best suit their circumstances
- Explaining the details of finance arrangements
- Putting loan customers in touch with lenders that can meet their needs
- Negotiating with lenders to secure the best deals possible
How much does an asset finance broker cost?
The cost of an asset finance provider will depend on a number of factors such as the firm used, the individual broker and the amount you're looking to borrow. As previously mentioned, some finance brokers work solely on a commission basis, and therefore their services may be free of charge to prospective borrowers. Other brokers may charge their clients directly in the form of an hourly rate or a flat fee.
Which is better?
At the end of the day, you want the equipment you need for your business for the best possible price, and the least possible hassle. However, while an asset finance broker employed on a commission-only basis may seem like an attractive prospect, it's always a risk that their impartiality may be compromised in favour of opting for the lender that pays the highest commission. Lenders that offer the highest commission may also have the more expensive policies.
Opting for a broker who charges a fee may mitigate this risk. A broker who works on a fee-basis, as opposed to solely on commission, may be motivated to find you a better deal. Therefore, it could be considered an investment to pay up-front for services.
Pros and cons of using a broker
- Utilises industry expertise
- No/low cost options available
- Relieves you of some of the legwork in finding a loan for your equipment
- Potentially unnecessary additional cost
- The broker's interests may not align with your own
- A broker may not source the best deal for you
How do I choose the best asset finance broker?
When it comes to choosing a broker, it's a good idea to look out for the following:
Dig into the firm or individual's reputation; what are people saying about them online? Do they have any negative reviews? Do you know anyone who has worked with them before?
ASIC requires all financial services providers to hold a minimum of an AFS (Australian Financial Services) licence or be an authorised representative of an AFS licensee. While it is a requirement that all brokers are licensed, it's also a good idea to ensure this is the case prior to establishing a relationship – just to be safe.
It's important to be aware of any and all potential fees up-front. Brokers are also required to disclose any affiliations and conflicts of interest that they may have. Therefore, it's helpful to ask the right questions early on. However, it is worth noting that ASIC does require that a broker put your interests before their own affiliations.
A good broker should keep in touch with you regularly and be proactive with updates about your loan options.
It's important that you look for a broker who is empathetic to your needs. Reputable brokers shouldn't push finance onto you that you're unsure about or which isn't suitable for you.
Possibly one of the most important qualities in an asset finance broker is their knowledge of the industry. Whether you're looking for a chattel mortgage, a novated lease, a secured business loan or something else – a good broker ought to have a diverse portfolio of lenders and be able to help you with any queries you may have.
What to consider
Whether you decide to go ahead with utilising the services of an asset finance broker or not, it's important to compare your asset finance options. Taking the time to compare options yourself means that you'll be better equipped to make informed decisions, with or without the help of a professional.
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