In order to make ownership of a new car manageable, obtaining the right car loan to fund a purchase is a key factor when planning to buy a vehicle on finance. Although car dealerships offer finance deals to make the buying process simple and faster, it’s important that the person making the offer is duly licensed to offer credit facilities; or at the least, be an authorized representative of a licensed credit facilitator. Mainly because licensed lenders and finance brokers are under obligation to provide, or facilitate a credit contract that will not put a borrower at a disadvantage.
Sales-Driven Financing Deals Offered by Many Australian Car Dealerships
Although in Australia, car dealerships were given exemption from the car licensing requirement prescribed by the country’s National Credit Act, the exemption will soon be abolished. The Australian government is currently poised to remove the said credit licensing exemption of car dealerships and their representatives, based on the recommendation of the Royal Commission. The latter made the recommendation after conducting a year-long investigation and hearing known as the Misconduct in the Banking, Superannuation and Financial Services Industry.
The findings revealed that due to their exemption from any legal obligation to offer or facilitate only fair and equitable credit contracts, many car dealerships sold automobiles on finance that benefited only their sales-driven interests. As a result, numerous automotive consumers were burdened with car loans they could not afford to settle; wasted money on monthly payments and eventually lost the vehicle to lenders who repossessed them as loan collaterals.
The Importance of Hiring a Licensed Finance Broker
Even if there is a multitude of banks and financing institutions that can provide car loans to consumers, the first step to buying a new car by way of finance in Australia, is to look for a duly licensed car loan broker. Mainly because they can help you work out a car financing deal that matches your personal finance by negotiating with a lender on your behalf. The rationale behind this kind of financing service is the fact that Australian finance brokers are holders of an Australian Credit License that binds them to the following general conduct obligations when brokering a deal:
1. To act honestly, fairly and efficiently.
2. To possess adequate competency when engaging in consumer credit activities; as well as ensure that they will authorize only competent representatives who will act on their behalf as a credit licensee
3. To make certain that their clients are not put at a disadvantage, by recommending car loan contracts that are not in conflict with their clients’ interests.
4. To comply with the rules and guidelines prescribed by the National Credit Act such as, but not limited to the following:
- Ascertain and verify a customer’s financial conditions to determine the type of credit contract that best suits the concerned individual.
- To properly disclose and explain the terms and conditions of a car loan contract to the customer and make sure that the latter has a thorough understanding of the related credit obligations.
- While Australian finance brokers may hold in trust the money set aside by a client for monthly payment/s, a separate trust account must be maintained for the said money.
To cite an example, the National Loans Australia, is one of the leading providers of financial services in the country, not only because the finance experts are holders of an Australian Credit License. The company itself has had more than 24 years of providing suitable financing solutions to consumers looking to buy a vehicle, whether from a private seller or from a dealer. Moreover, feedback from satisfied clients can attest to the efficiency of their services in helping them obtain a car loan that is equitable to their personal or business finance.