Confused about choosing a car finance broker?
With so many comparison sites, types of loans and lenders currently on the market, it can be difficult to find a car finance broker to suit you. Before you make a decision, you should consider the type of finance you are seeking, your credit history and your personal circumstances.
Much like online comparison sites, finance brokers each have different specialities. Where one finance broker may specialise in vehicle finance, another will specialise in mortgages. These brokers would only be able to help customers seeking finance in their specific section of the market.
Many brokers cater for either ‘prime’ or ‘sub-prime’ customers. A ‘prime’ customer is someone who has a typically ‘good’ credit history; this means that they are considered to be at lower-risk of default. A ‘sub-prime’ customer is someone who is young, may have had missed payments in the past, may have a poor credit history or a lower income. A sub-prime customer is considered to be at greater risk of default, this means that they will be charged a higher rate of interest to mitigate this risk. Online search engines are useful tools when searching for finance brokers. Many brokers tailor their sites to certain searches for example: “poor credit car finance” would take you to a sub-prime broker, “good credit cheap car finance” would take you to a prime broker and so on. By finding a broker suitable to your circumstances, the panel of lenders and options available to you will be greater. This means that the broker should be able to find a cheaper agreement or lender suitable to your credit profile.
Finance brokers earn their living in one of three ways: either they charge the customer a fee for their services, they receive a commission from the lender or a combination of the two. Whilst you do not want to accrue more credit searches than necessary on your record, in some cases it is advisable to ‘shop around’. Many brokers offer a ‘soft search’ where no blight is placed on a credit record and a rough payment can be calculated. In some cases it may be cheaper over the course of the agreement to pay a fee, and in others it may be cheaper to take a slightly higher rate of interest. This is variable on a case-by-case basis. If the customer is charged a fee, the broker must disclose this immediately in line with FCA regulation.
The FCA stands for the Financial Conduct Authority. They are the regulatory body for all finance institutions in the United Kingdom. The FCA provides regulatory guidelines that the industry must adhere to. The FCA bases its regulation around a series of principles; all of the principles are focused around making finance clearer, fairer, transparent and customer focused, rather than profit. All finance brokers must be authorised by the Financial Conduct Authority. They must conduct all aspects of their business in a clear, fair and not misleading way. If you feel as though your broker has not treated all aspects of your transaction in this way, contact the Financial Conduct Authority at www.fca.org.uk.
Still having trouble picking a car finance broker? Give New Look Loans a call on 01482 736057.