How Would A Finance Broker Be Of Help?
There is no shortage of money lenders in the market. The sheer number of lenders around you is both a blessing and a curse. It's a boon because you would eventually find a lender, irrespective of what your credit history is like. The difficult part is you'll have a hard time finding the right lender for your requirements. And finding the right lender is not all - there are the red tape and excessive documentation you'll have to put up with before your application is approved.
What is a Finance Broker?
A finance broker is an individual or entity that has expert knowledge about the various financing options, including home loans, consolidation loans, investment loans, business or commercial loans, and car loans. A finance broker would negotiate with financial institutions - such as banks, building societies, and credit unions - on your behalf so that you benefit from a lending arrangement that suits your specific requirements. Since finance brokers have access to a huge database of lenders, they can easily compare an array of the finance options available.
How Do Finance Brokers Help?
Most people believe comparing loan products and interest rates to zero in on the right loan option is all that finance brokers do. In reality, a finance broker's job far transcends that initial shopping phase.
Once the right lending product is found, the broker would help you with filling out necessary documentation and forwarding them to the lender house. The broker would know the specific supporting documents that should be included with the application, which includes your employment history and income evidence, bank statements that verify you have no past loan repayment arrears or defaults, and any other piece of information that would help strengthen and support your application. Thereafter, a finance broker would also submit the loan application and see through the process until your application is approved.
A good finance broker would also spend time and effort clearly explaining to you the various lending products so that you understand your loan choices and how they would impact your financial goals overall. The broker would walk you through your loan contract's fine print so that you understand your commitments.
How Are Finance Brokers Compensated for Their Service?
In almost all cases, finance brokers get paid a commission by the lender you ultimately borrow money from. This means you would not be paying any money out of your own pocket for the broker's services.
Various credit providers pay different types and levels of commission. However, reputable finance brokers would be more than happy to reveal details about the commissions they would likely receive for having facilitated the loan. Moreover, the entire commission amount the brokerage firm gets paid is mentioned on your loan papers.
Selecting the Right Finance Broker
There are several finance brokers around who are willing to assist you with your loan hunt. To ensure you work with the right broker, adhere to the following:
- Check broker qualifications: A finance broker can function as a professional only if he has a license to show, at least in Australia. Therefore, check you are joining hands with a duly licensed and accredited broker.
- Industry membership: Finance brokers in Australia should also have memberships with various accreditation bodies, such as the FBAA (Finance Brokers Association of Australia) and COSL (Credit Ombudsman Service Ltd.).
- Willing to interact: The broker you choose should be willing to answer your loan-related questions. If not, take your barrage of questions to a more forthcoming broker.
- Seek recommendations: Ask family and friends for broker suggestions. If none of the people you know have hired finance broker service before, look for recommendations online.
Finding the right loan can be complex, time-consuming, and quite taxing. Therefore, hire a finance broker and take the major load of responsibility off your shoulders.