A Guide to Car Loan Brokers: Pros, Cons and When to Consider Using One

By Alexi Falson on 03 Jan 2024
image for A Guide to Car Loan Brokers: Pros, Cons and When to Consider Using One If you’re looking to buy a new car, you’ve likely wondered whether or not it’s worth using a car loan broker to help find you the best deal possible.

With so many avenues for buyers to walk down, it’s easy to be overwhelmed by the sheer number of options you have, and even easier to make a rushed decision when you’re staring at the car of your dreams.

To help you make the right decision when the time comes, let’s take a look at exactly what car loan brokers do, their respective pros and cons and talk about when you should consider leaning on a car loan broker in the future.

What is a Car Loan Broker?

To put it simply, a car loan broker, like other forms of brokers, acts as an intermediary between you and a financial provider to help finalise vehicle finance for your purchase.

Vehicle loan brokers are connected to financial providers and can help give you an idea of your current borrowing capacity, provide steps to potentially increase your borrowing capacity, as well as map out and compare your full range of vehicle loans from different lenders.

Car loan brokers also compile your paperwork and can help out when it comes to submitting your pre-approval and final application for vehicle finance.

How Does a Car Loan Broker Work?

Car broker services operate as a bridge that connects you, the buyer of a vehicle, with your finance provider and the dealership that delivers your vehicle when everything is organised.

Like all brokers, car loan brokers work to connect buyers with a car loan that they can afford to service and are typically paid a commission from the finance provider once the loan is signed, sealed, and delivered.

The best car loan brokers will often justify the fees that you’re paying them by providing you with a myriad of finance options that can save you thousands throughout that loan period, offering tailored advice and helping to get some tricky applications over the line.

What are the Benefits of Using a Car Loan Broker?

One of the major benefits of using a car loan broker is being able to lean on expert advice from an experienced finance professional who is working in your interest to find you the best possible finance options.

Car brokers offer advice tailored to your financial situation and your budget constraints, presenting you with vehicle finance options that you can afford to service, both now and years down the track to ensure there are no nasty surprises.

Perhaps the biggest benefit of using a car loan broker is that they’ll present you with many different options from a range of providers; when it comes to a car loan, the more options you have to sort through, the better.

Vehicle loan brokers are also bound by strict regulations that ensure they provide you with the most attractive finance options for your car loan, and make for by far the most convenient way to compare your finance options while applying for vehicle finance.

  • Expert advice, tailored to your needs and acting in your interest 

  • Knowledge of different products, conditions, terms etc

  • Provides you with a range of finance options from different lenders 

  • Help to compile your application 

  • Assistance with complex applications 

  • Highly regulated to act in the interest of buyers

  • Extremely convenient

Why Should I Use a Car Loan Broker Over Dealership Finance?

Dealership finance may be convenient and seem like a great idea when you’re staring your dream car down in a dealership, but the reality is that it’s often a far less competitive loan option.

We know it’s tempting, especially if you’re in a hurry to buy, but you’ll be thanking yourself down the line if you, at the very least, talk your options over with a car loan broker.

Chances are that with the help of a car loan broker, you’ll find yourself a much more appealing finance option than what you’ve been presented by the dealership’s finance team, which is often linked to a single lender with less competitive rates for buyers.

What are the Cons of Using a Car Loan Broker?

One of the cons of using a car loan broker is the fees attached to the service, though as we’ve mentioned, the best brokers can help to find finance options so competitive that they help to pay off these fees, compared to dealership finance, for example.

Some brokers can also be limited in terms of the finance providers they’re connected with, meaning you might not have all possible options presented to you, though a true professional broker should present you will all possible avenues.

For buyers in a rush, utilising a car loan broker might slow down the purchase process, though leading car broker services like OnlineAuto have been designed specifically to get your loan over the line and you into your new vehicle as soon as possible.

Is it Easier to Get a Loan Through a Broker?

While using a car loan broker doesn’t necessarily change the outcome of a loan application, it is by far the easier option for busy Australians looking to get the best finance possible on their vehicle purchase.

Leading brokers will simply give you a list of what they need from you, then go ahead and compile your application.

Car loan brokers can also provide insight into the strength of your application and advise when an opportunity arises to help increase your chances of getting the loan approved, when possible.

Should I Go Through a Broker For a Car Loan?

We’re not in a position to give you any financial advice, though it’s hard to argue that having more information, options and financial information at your fingertips will help you make a more informed decision.

Leaning on a financial professional’s expert advice as to your current position, loan options and payment terms helps to provide a clear map of your borrowing capacity, repayment cycle and even the most minute details of your finance package.

Everyone’s finances are different, and while there’s no right and wrong answer to the question of whether you should go through a broker for a car loan, tailored advice from experts is without a doubt one of the most important tools in the car-buying process.

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To find out more about OnlineAuto’s range of services and how much, one of our car-buying experts can save you on your dream car, click here.


Alexi Falson

Alexi is an automotive journalist and road tester hailing from Byron Bay. He has an affection for both cars and motorbikes, a great admiration for the simplicity of old-school engineering, and a fascination of new technology making its way to modern cars. When he's not road testing, you'll find him surfing, hiking or helping people find their dream cars.

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