Applying for a car loan through an online broker can be a quick, convenient way to secure the right kind of finance for your car purchase.
If you’re interested in buying a new car but put off by the process of securing a loan, you might consider applying for finance through an online intermediary. Car loan brokers assist customers with filling in loan applications and helping them find the best lender and loan product to suit their individual needs.
Online brokers help you fill in the application forms and advise you on how best to present yourself and your situation to your potential lenders. Applying with a broker means that your application is submitted to several lenders, which increases your chances of getting approved.
How do car loan brokers differ from a car lender?
There are a few key differences between a car loan broker and a car lender. The car lender, such as a bank or standalone financier, is able to provide car finance directly through their branches. A car loan broker goes between banks and car lenders to find a loan that will meet your needs.
A lender can only offer you the products that it has whereas a car loan broker is able to pick and choose the loans it’s able to suggest. Car loan brokers sift through the lenders for you instead of you having to go to multiple lenders to get quotes.
Compare car loan brokers below in the table below
What are the benefits of using car loan brokers?
There are a variety of benefits that come with using a car loan broker.
- Access a range of lenders. If you’re time-poor but still want the best deal available for your car needs, a car loan broker is able to engage with a variety of lenders and different institutions in order to get you what you need.
- Convenience. There are many institutions competing for your business at the same time instead of you individually meeting with one lender at a time.
- Save your credit file. Rather than applying with more than one lender, which will damage your credit score, working with a broker essentially lets you apply with multiple lenders through one application.
How do you choose a car loan broker?
It can be tough choosing a car loan broker, but it’s important to consider whether or not they meet your needs. The most important thing to know first off is if they are licensed within Australia to be brokering loans. If they’re not, walk away. You can search whether or not they are licensed through ASIC Connect’s Professional Registers.
Another thing to consider is that a loan broker is impersonal. If you like meeting the lender who will grant your loan request in person, this may not be the ideal situation for you as loan brokers send applications off for approval.
Also keep in mind that a car loan broker should be transparent with its fees. It is important to ask what loans a broker offers, who it works with and if it charges a fee for its services.
Getting all the right information is vital in making your decision, so it’s okay to ask questions before agreeing to go with a car loan broker. Making a wish list of your loan requirements can also help as you can show the loan broker what you’re looking for.
Are there any risks in using an online car loan broker?
There are a few risks to using an online broker. For example, you may not be approved for a loan despite following the broker’s instructions and filling out the form properly. This can be tough as you have done the legwork and received no reward for it.
There is also the potential risk of being approved for a loan but it’s not the amount that you need. Keep this in mind when you apply.
Another aspect to keep in mind is that the loan the broker is pushing may work out better for the broker than you, whether that is because of a higher commission rate or a higher fee that it charges you. These possibilities are something to keep in mind when deciding whether or not you want to go with a car loan broker.
How does applying for a car loan online work?
The first step is getting in touch with the online broker about your car finance needs. Most car loan websites have a contact or a quote form you can fill in. The car loan broker will then follow up with you about your financial situation, the car you’d like to buy and the appropriate loan product. This information will be used to do a preliminary assessment of your situation.
After cross-checking your application against various lenders’ criteria, the broker will recommend a loan product suited to your situation. If you agree to the suggested terms, the broker will secure the finance on your behalf.
You will also need some information from the seller so that the lender can settle the loan contracts. Funds will then be sent directly from the lender to the seller, after which you can collect your new car.
What do you need to apply with a car loan broker?
Here’s what you’ll need to submit as part of your application:
- Driver’s licence
- Medicare card
- Proof of income
- Proof of residence
- Passport or birth certificate
You’ll also have to provide information about the car you’d like to buy and the person or company selling it (if you’ve chosen your vehicle). The more complete your application, the better your chances of getting it approved. Online brokers work with a variety of lenders, so they’ll help you cast a wide net by highlighting the strongest aspects of your application.
What are the pros and cons of applying with an online car loan broker?
- Bad-credit applicants accepted. While traditional lenders might be wary of ending to customers with bad credit, you might have better luck with an online broker since your application is submitted to several alternative lenders.
- Possible discounts. Online brokers do lots of business with certain lenders, so chances are that they may be able to negotiate loan terms and get discounted interest rates for you.
- Legwork. Besides helping you with the application itself, the online broker does all the legwork in shopping around for the best loan for your budget.
- Impersonal.If you prefer face-to-face exchanges with lenders, then this solution is not for you. The broker submits your application to lenders on your behalf, and you might not even meet with the lender who grants you the loan.
- Additional fees. Brokers charge a brokerage fee for their services, as well as other fees for setting up the loan. Added to the instalments, insurance and other fees, the loan can start becoming very expensive. Research the broker’s fee schedule before committing to any contract.
Is there anything you need to keep in mind?
Buying a new car is exciting, but there are a few things to keep in mind before signing any binding contracts.
- Be realistic. Besides a house, a car is one of the bigger investments you’ll make. Go for a purchase that’s good value for money and that you can afford to pay off and maintain.
- Thoroughly check the car. Before signing any legal contracts, make sure that the car corresponds with the seller’s description. Check the car’s mileage, the features advertised and its general condition.
- Don’t settle. You don’t have to sign or agree to anything if you don’t feel comfortable with the broker’s recommendations. Make sure that the broker has a clear idea of what you want and what you’re willing to pay.
Frequently asked questions about applying with car loan brokers
What if I don’t earn enough to qualify for an online car loan?
If you have valuable assets like property, other vehicles or business equipment, you can use these as security for a car loan.
Can I have finance approved before I start car shopping?
After an initial assessment, some online brokers offer conditional pre-approval before submitting your application to lenders.
How do I know I can trust the lender?
Since you’re not dealing with the lenders yourself, it’s a good idea to make sure you’re borrowing from a legitimate loan provider. Check to see whether the lender is registered with the Credit Ombudsman Service. In the case of a dispute or legal issues about the loan, you’ll be able to contact the service for an independent resolution.