Asset finance brokers: what they do and how they are paid

What does an asset finance broker do?

Four jobs, from the first conversation to the day the supplier is paid.

Works out the structure

Chattel mortgage, hire purchase, finance lease or operating lease; the term; and whether a balloon makes sense. Each puts ownership, the GST credit and the tax deductions in a different place, so a good broker sets the structure with your accountant's view in mind, not just the rate.

Picks the lenders

The banks, the manufacturers' finance arms, and specialist asset financiers. Several of those, including Macquarie, Pepper Money, Angle, flexicommercial and Metro, write equipment finance through brokers and do not publish product terms on their public sites, so a broker is the way in.

Packages the application

Each lender wants the file in its own form: supplier quote, financials or bank statements, BAS, and details of existing finance. A broker who knows which lender is saying yes to a file like yours lodges once, rather than adding declined enquiries to your credit file.

Negotiates and settles

The rate, fees, balloon and term; then the paperwork, the payment to the supplier and the lender's PPSR registration over the asset.

How are asset finance brokers paid?

Usually by the lender, as a commission on the amount financed when the finance settles, sometimes with a trail. Some brokers also charge the borrower a fee, instead of or on top of the commission, particularly on complex or small deals. Because business asset finance is outside the National Credit Act, there is no legal requirement to disclose commissions in the form that applies to home loans, and no Best Interests Duty. Reputable brokers disclose anyway: ask for the fee and commission arrangement in writing before you engage one.

How Your Finance Guide is paid. Your Finance Guide is free to use. Licensed brokers who meet our criteria pay Your Finance Guide a partnership fee to receive enquiries from this site. The fee is paid by the broker, not by you, and is not added to your loan. Brokers are usually also paid a commission by the lender when a loan settles. Full details are in our Credit Guide.

Broker, bank or dealer finance: which is better?

Is a broker better than a lender?

Not always. If your bank already prices your business well, or a maker's promotion covers the exact machine you want, going direct is quicker. Take the written offer to a broker anyway: they can show you whether another lender beats it on total cost, including the balloon and fees.

What does an asset finance broker need from you?

• The supplier's quote or the private-sale details: make, model, year, hours or kilometres, and price.
• ABN, GST registration and photo ID for the owners or directors.
• For a bank: the last two years of financial statements and tax returns, the current year's BAS and an ATO portal print.
• For a smaller low-doc loan: recent business bank statements, often six months.
• A summary of existing equipment finance, overdrafts and business loans.
• For a private sale: proof of ownership, so the broker can run a PPSR search.

How do you check an asset finance broker?

1. Search ASIC's register. The Professional registers search on asic.gov.au covers credit licensees and credit representatives, and you can search by name, licence or registration number, ACN or ABN. A credit representative is authorised by a credit licensee to act on its behalf, so the entry names the licensee too. ASIC also keeps a register of banned and disqualified persons.
2. Ask which licence they operate under. A broker who also arranges consumer finance, such as a personal car loan, needs to hold an Australian Credit Licence or be a credit representative. Business asset finance itself sits outside the National Credit Act.
3. Ask about membership. The FBAA and MFAA set conduct standards for their members, which fill part of the gap the Credit Act leaves for business lending.
4. Get the money in writing. Commission, any fee, and who pays each.
5. Ask what they have funded. Which lenders they use for asset finance, and whether they have financed your kind of asset and business before.

Asset finance, commercial finance and mortgage brokers

A commercial finance broker arranges business borrowing: business loans, asset finance, invoice finance and commercial property loans. An asset finance broker specialises in vehicles and equipment. A mortgage broker arranges home loans, which are regulated consumer credit with a Best Interests Duty. Many brokers do more than one; the protections differ with the loan. The business loan broker guide covers unsecured and property-backed business lending, and the equipment finance hub compares the structures.

Can you borrow against equipment you already own?

Sometimes. Medfin publishes refinancing of equipment a practice has recently bought with cash, and HPE Financial Services publishes sale-leaseback for its own hardware. For larger amounts, a business loan secured by property is the other route. A broker can say which lenders will refinance the assets you hold.