The days are numbered for traditional car dealer financing! The popularity of car finance brokers is on the rise, and they can help drivers like you get an affordable car finance deal. A car finance broker acts as the middleman between customers and the lender and works on the customers behalf to find the best finance deals. This guide looks at how finance brokers work and how their structure can help UK drivers get a better car finance deal and save money when getting into their next vehicle.
What is a broker for cars?
A broker for cars works in the same way as a mortgage or loan broker. They help customers to be matched with the best lender for their situation and get the most affordable car finance package from a number of lenders. Brokers can find deals from the lenders on their panel and all brokers will have access to different lenders, some may specialise in helping people with bad credit get a car loan or be specially designed for low interest deals. If you’re approved by more than one lender, they can then help you to choose the lowest rate offered to help save you money.
Is a broker free to use?
It can be worth checking with the broker who you want to use first but usually they are free to use for the customer. Many brokers instead work on a commission basis and if you take up finance with one of their lenders, they charge the lender a commission fee for the introduction to you. Customers then pay back the lender each month once they’ve secured finance through them.
Why are brokers helpful to customers?
Car finance brokers can help customers in a number of ways. It’s a common misconception that brokers are slow and it’s easier to sort your finance at a car dealer. However, getting a car through a broker can give you car finance with an instant decision and the ability to drive away in your car within a matter of days! Car dealers can be limited to the lenders on their panel, and you may not be getting the best deal possible.
Protect your credit score.
When you hunt around for the best finance deals, it can be tempting to apply with a number of lenders at once. When you apply for finance, lenders will perform a credit check on your credit file and too many credit checks in a short space of time can harm your credit score. When you apply through a broker, you only need to apply the once instead and they do the leg work for you with the lenders.
Get the best deal for your situation.
Car finance brokers can help you compare multiple lenders at once and get the best finance deal for your circumstances. Brokers work to match customers with the lowest APR car finance deal from a number of finance deals offered. If you’re approved by more than one lender, the broker can help you select the lowest rate offered with the cheapest deal.
Get a car you can afford.
The finance first approach provided by a broker means you can secure a finance deal you can afford. Once your finance is secured, you then have the freedom to buy a car within your budget from a dealer of your choosing. It can be worth checking if the dealer works with brokers first but in general, as long as the dealer is verified by the FCA, they will be able to work with the broker.
Bad credit credit.
Whilst car finance can never be guaranteed to any applicant, and you may apply with a broker and receive no approvals from their lending panel. In some cases, bad credit applicants may find it easier to secure a deal through a broker. Traditionally, it can be harder to finance car with bad credit because you’re more likely to default on your loans in the future. There are even bad credit brokers who have created their lending panel with the bad credit applicant in mind!
