When looking for car finance, you have two main options: go direct to a lender (bank, credit union, online lender) or use a finance broker. As brokers ourselves, we think it's important to give you the honest truth about both options.
What Does a Finance Broker Do?
A finance broker acts as a middleman between you and multiple lenders. Instead of you applying to several banks, the broker:
- Assesses your situation
- Searches their panel of lenders for suitable options
- Recommends the best match for your needs
- Handles the application process
- Manages communication until settlement
Brokers are paid a commission by the lender when your loan settles — you typically don't pay them directly.
Advantages of Using a Broker
1. Access to Multiple Lenders
A good broker works with 20-40+ lenders. One application gives you access to all of them, rather than applying to each individually.
2. Time Savings
Comparing loans yourself takes hours. A broker does the legwork and presents you with options — often within hours.
3. Expert Knowledge
Brokers know which lenders suit different situations:
- Self-employed? These lenders are flexible
- Older car? These ones will finance it
- Credit issues? These might still approve you
4. Better Chance of Approval
Brokers know each lender's criteria. They won't send your application somewhere likely to decline — saving your credit file from unnecessary hits.
5. Negotiating Power
Good brokers can sometimes negotiate better rates, especially for strong applicants.
6. Free to You
The lender pays the broker, not you. You get a professional service at no direct cost.
Disadvantages of Using a Broker
1. Not All Lenders
Brokers only work with their panel. Some lenders (including some banks) don't use brokers at all. You might miss a better deal elsewhere.
2. Potential Conflicts
Brokers earn commission from lenders. A dishonest broker might recommend a loan that pays them more, not the one that's best for you.
How to protect yourself: Ask about multiple options, not just one recommendation. A good broker will explain why they're suggesting each option.
3. Variable Quality
Like any industry, there are excellent brokers and terrible ones. Doing some research (reviews, recommendations) helps find the good ones.
4. Less Direct Control
You're relying on someone else to handle your application. If they drop the ball, it affects you.
Advantages of Going Direct
1. Existing Relationship
If you've banked with someone for years, they know your history. This can sometimes help with approvals or rates.
2. All Lenders Available
You can approach any lender, including those that don't work with brokers.
3. Direct Communication
No middleman means direct access to the decision-maker (though in practice, you often deal with call centres anyway).
4. Potential Package Deals
Some banks offer better rates if you bundle products (home loan + car loan, for example).
Disadvantages of Going Direct
1. Limited to One Lender
Each application shows on your credit file. Applying to several lenders to compare can actually hurt your credit score.
2. Time-Consuming
You need to research, compare, and apply separately to each option.
3. No Expert Guidance
Bank staff are trained to sell their products, not to tell you if a competitor is better for your situation.
4. May Not Get the Best Rate
Without comparing, you don't know if you're getting a good deal or not.
Comparing the Options
| Factor | Finance Broker | Going Direct |
|---|---|---|
| Lender Choice | Multiple options (panel) | One lender at a time |
| Time Required | Lower (broker does work) | Higher (you do research) |
| Expert Advice | Yes | Limited (sales-focused) |
| Credit File Impact | One enquiry (usually) | One per application |
| Cost to You | Free (lender pays) | Free |
| Best For | Most borrowers | Loyal customers, simple situations |
When to Go Direct
Going direct might make sense if:
- You have a long relationship with your bank and want to keep everything together
- Your bank is offering a special deal (e.g., discounted rate for existing customers)
- You have a very simple, straightforward application
- You enjoy doing financial research yourself
When to Use a Broker
A broker is probably better if:
- You want to compare multiple options without multiple credit hits
- Your situation is non-standard (self-employed, credit issues, unusual income)
- You value time over doing the research yourself
- You want someone to guide you through the process
- You're not sure what rate you should be getting
THE VERDICT (HONEST VERSION)
For most people, a good broker will get you a competitive rate with less hassle. The key word is "good" — choose one with solid reviews, who explains your options clearly, and doesn't pressure you. That said, if you have a great relationship with your bank and they're offering a competitive deal, there's nothing wrong with going direct.
The Bottom Line
There's no universal right answer. The best approach is often to check with a broker AND your own bank, then compare. Just be upfront — a good broker won't mind you doing your homework.
Want to see what we can offer? Get a free quote — no obligation, and we'll show you multiple options so you can decide what's best for you.
READY TO GET STARTED?
Get a free, no-obligation quote in minutes.
Get Your Free Quote →