Car Loans: The finance broker process
Step 1: The Referral
When it comes to car loans, the majority of our new clients are referred to a good broker by their existing customers.
After an initial introduction has been made, a broker will take the time to get to know a new client’s situation and think about:
- What the client is looking to do?
- What are their goals and where do they see themselves in the future?
- What can they do to help their client get there?
When a broker has a clear idea of exactly what a client wants, they can then start going about making the necessary enquiries to lenders, conveyancers, lawyers, accountants, financial planners and other third parties to put their client in the best position to get to where they want to be, both now and into the future
Step 2: The Appointment
Once a broker understands what the client is looking for, and what they can do to help, they will typically send out a questionnaire to be completed before a face to face meeting is scheduled. This ensures that the brokers is a step ahead and allows sufficient time to research what their possible options are.
Once the broker has a client’s information, they will then arrange a time to meet in person and will usually make a courtesy call 24 hours before hand to confirm the appointment.
A typical first appointment goes for around 45 minutes and covers:
- What the client is looking to finance
- How they see themselves achieving their goals
- A an in-depth discussion on a clients financial situation
- What the broker can do you help them reach their goals
- A discussion of all a client’s possible options
Step 3: Market Research:
Based on the information provided by a client, a broker will then send out an email which summarises what was discussed and some recommendations of what to do next. These suggestions typically consist of 4-6 loan options and are accompanied by comparisons which breakdown each alternative.
The client’s broker will provide their own recommendation, however, the decision is ultimately the clients. They are given time to think over the information provided before the broker will again touch base.
Step 4: Client Follow Up
Next, a broker will make sure to answer any questions the client might have before confirming which loan option they wish to proceed with.
A broker will then go over loan amounts and structure options to further tailor the loan to fit a client’s situation before getting approval to submit their application with the customer’s choice of lender.
Step 5: The Application Process
As soon as a client decides on a lender, a broker will advise them of the current service level time (the length of time typically needed by a lender to process an application). Historically, during the Holiday seasons like Christmas and Easter as well as around tax time, a lender’s turnaround time generally increases drastically. A service level time that might usually sit around 72 hours could potentially jump up to 10 business days, depending on the volumes being received. That said, if a turnaround time is unrealistically long, there is always the option of going to a different lender.
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Step 6: Application Results
Once we receive a lender’s response to a client’s application, we immediately get in touch with our client to talk about the lender’s findings. These results can generally be broken up into three categories:
The application was approved by the lender and there were no unforeseen issues. Over 90% of our applications come back with approval due to our in-depth understanding of lender requirements.
This can occur when a client has not disclosed all of the required information, or if some of the information provided was incorrect or incomplete. For example, if a client has a history of bad credit or bankruptcy and did not disclose that information, a loan application would most likely come back as denied. A broker will not perform a credit check without a client’s expressed permission; a lender on the other hand will perform a credit check as a part of their risk assessment (lenders also require permission in the form of a privacy act).
An application rework occurs when all the pieces are there but, for whatever reason, they just don’t quite fit. This can happen when a client’s situation was thought to meet the lender’s policies and guidelines, but due to incorrect information from the lender, ambiguously written guidelines or complex client situations, a warning was triggered somewhere along the line
The approval and loan application process can take up to 2 weeks, during which a broker should maintain regular contact with clients to keep them informed every step of the way. Once the final loan contracts and documentation have arrived, a broker will arrange another face-to-face appointment to complete the sign up before proceeding to arrange any requirements for settlement.
Step 7: Wrapping Things Up
Once a broker has collected all the documentation they need, it‘s just a matter of sending it all off to the lender and then making sure that the supplied documentation is certified (meets lender guidelines) in preparation for settlement of the loan.
A car finance broker weighs all of the loan options open to you and then makes recommendations to their client based on their specific situation.This saves both time and money for their clients, and they can even help people with bad credit