Broker vs Bank

Benefits of Going To A Financial Broker in New Zealand

If you are thinking about applying for a loan don't go straight to your bank - there are other options! There are several benefits of going to a financial broker for your financial loan needs, what are the benefits of broker vs bank?

• Loans
• Mortgages

Broker vs Bank
If you are considering applying for a loan, whether it be for personal, business or mortgage purposes, you might not know that not ever lender is offering the same deal and interest rates, and you need to choose the avenue by which you'll make your application carefully: broker or bank? Read on to find out the difference and what each can offer you.

When you are looking for personal finance help, The broker vs bank argument is one that many people are unsure of. What is the difference between a bank officer and a broker? Who can get you the best deal, and what is the process with each?

Bank Officers
You've probably been thinking about heading down to your bank branch and talking to one of the bank officers about your bank's finance and loan options. The bank officer's job is to sell you their product, once they determine you are a candidate they can rely on. They often have a wide array of loans from which they can draw from, but all loans originate from one source: their employer.

The main benefit from going direct to your bank officer is that if you are a long-term customer with good history and some assets, they may offer you a 'relationship package' which gives you other benefits as an incentive not to seek your loan elsewhere. This can include waiving and discounting of transaction, set-up and establishment fees for the loan itself, plus taking care of your other bank activity with discounts on insurance and waived credit and debit card fees.

Brokers
Brokers on the other hand, are independent personal finance help consultants who do not have allegiance to any particular bank. They work as freelance agents in a sense, and have access to the loan deals provided by all of the New Zealand banks and lenders. Brokers are financial advisory professionals who have experience in dealing with a wide range of loans, including personal, home, business, investment, equity, and so on. Because of their exposure to the rest of the industry, they have often dealt with a much wider range of financial situations than bank officers will have.

A broker's job is to first understand your credit situation and what your needs are. Often, you'll have one idea of how you think you want to handle a financial situation, but a financial broker will be able to provide other angles which you might not have thought of. A broker's job is to get the best deal for you, which suits your needs. Unlike banks, they do not have a set list of loan options which they need to stick to - they can simply present you with the best available in the country.

They Key Benefits of Broker over Bank:
One of the key benefits when you find a mortgage broker instead of going direct to your bank is the bargaining power of a broker. Once they determine a specified range of loan options for you, they can go back to the banks or lenders and get them to compete with each other for your custom, ensuring you get the best loan deal to work for your circumstances.

Additionally, brokers can often find finance lenders who will approve loans which other lenders may decline. This is particularly relevant if you have had bad or questionable credit in the past. If you are after a loan for business or out-of-the-ordinary purposes, you may find you have much better luck securing one through a broker. This is because a broker will fight for their client to be considered where necessary - they don't have an 'open and closed door' policy like banks do towards particular people in particular situations. Brokers provide an opinion to their clients on their whole financial situation, they have a much wider scope that the bank's guidelines allow them to look at.

It is also very important to note that if you go to a bank first and get declined for a loan, a broker cannot reapply to that same bank for you - your custom is out in their books. If you go the other way around and the broker applies for you first and is then declined, they can resubmit their case and push harder to prove that you are a viable candidate for the loan.

Brokers are selling you, while bank officers are selling their product. While brokers receive a commission from successfully obtaining a loan for you, they generally receive the same remuneration no matter what rate they secure for you - so they don't have any reason not to get you the absolute best rate from shopping around from all lenders. Conversely, bank officers' rate of pay (and bonus rate) is often set in direct relation to they amount they have to discount your rate to their employer's posted rate.

Additionally, brokers possess the negotiating skills to challenge bank officers in the best way possible because they are heavily involved in the same industry. If you go direct to the bank, all negotiation is left up to you. Banks have a criteria of questions which can seem invasive and irrelevant to you at the time, but they require you to answer them on the spot. When nerves take over, this can mean you might leave the bank thinking you haven't presented yourself as best as you could have. A broker on the other hand, will talk to you and strategically devise a plan on selling your custom in order to minimise your chances of being declined.   

How Do You Choose?
While going direct to a bank can see you get a small package deal on all of your activity with that bank, going to a broker first may prove much more beneficial when finding the absolute best rate and if your financial situation is uncertain. Remember to shop around for a solution you are comfortable with and take time and consideration before making any decisions.

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Business images from Flickr: Broker, New Zealand Flag and Wellington Buildings.