An asset finance broker's job is to solve the credit problem before a lender ever sees the file. Go direct to a bank and that job transfers to the credit assessor, whose answer is binary and whose benchmark is their employer's credit policy, not your circumstances.
Most borrowers do not notice the difference until they have been declined once.
What the broker's job actually is
Three things happen when a broker takes on an asset finance deal that do not happen when you approach a lender yourself.
Credit positioning. Before anything is lodged, the deal gets mapped against lender appetite: asset type, asset age, security structure, borrower profile, industry classification, serviceability. A 2017 prime mover looks very different to a major bank's credit team than it does to a specialist transport lender. The work is figuring out which lender prices that deal as vanilla and which one flags it as a problem, then submitting to the first.
Structure selection. Chattel mortgage, hire purchase, finance lease, operating lease. Which one suits depends on the borrower's tax position, what the balance sheet needs to look like, and how the asset will actually be used. That choice moves GST timing, depreciation treatment under Division 40, and whether the liability sits on the books at all. A bank will write what it writes; it will not run that comparison with you.
Panel access. Aurelius Capital writes across the major banks, the second-tier banks and the dedicated asset financiers. Go direct to one lender and you get one set of criteria, one pricing matrix and one credit decision. If that decision is no, you start again somewhere else from cold.
The rate spread, in dollars
Chattel mortgage rates from the Tier-1 banks currently run around 6.26% to 8.74% p.a. Specialist non-bank lenders price low-doc deals between 7.80% and 11.50% p.a.
On a $250,000 equipment finance deal over five years:
| Rate p.a. | Total interest over the term |
|---|---|
| 6.5% | ~$42,300 |
| 7.5% | ~$50,900 |
That is $8,600, produced by a single percentage point inside one lender's own range, before you compare that lender to anyone else.
A file that arrives fully documented, with the asset classified correctly and the structure already settled, lands at the better end of that range consistently. A cold submission through an online portal gets whatever the scorecard decides. The gap between a positioned deal and an unpositioned one usually runs 75 to 150 basis points, which on a $250K facility is $5,500 to $8,600 in real money.
Declines compound the problem. Each application leaves a credit enquiry on the file, and a lender reading three enquiries inside two months reads them as three other lenders saying no. A broker submits once, to the lender most likely to say yes.
Structure: the part a bank will not explain
A relationship manager is trained to write chattel mortgages and finance leases. They are not paid to question whether either suits your tax position.
The structure decides three things a rate comparison will never show you:
- GST. A GST-registered business claims the full input tax credit upfront under a chattel mortgage, in the BAS period the deal settles. A finance lease spreads it across the rentals. An operating lease removes the purchase altogether, so the question changes shape again.
- Depreciation. Under a chattel mortgage the business owns the asset from day one and depreciates it under Division 40. Under a finance lease it depends on the specific lease terms. Under an operating lease the asset sits on the lessor's books and there is nothing for the business to depreciate.
- Balance sheet. An operating lease can keep the asset off the borrower's balance sheet, which matters when you are managing debt covenants or serviceability on other facilities. Whether it does depends on which accounting standards your business reports under.
Choose the wrong structure and the cost can outweigh whatever you saved on the rate. The full chattel mortgage vs operating lease comparison runs through each case.
What a broker costs
On most asset finance deals, nothing directly. The lender pays the broker an upfront commission when the deal settles, typically 2% to 4% of the amount financed, and that distribution cost is already priced in whether a broker is involved or not. The borrower is not charged on top of it.
Some brokers do charge a fee on complex or non-standard transactions. Where one applies it has to be disclosed in writing before anything is submitted. Our explainer on how commercial finance brokers get paid covers all three remuneration models, including trail and volume-based structures.
When going direct makes sense
Two situations genuinely do not need a broker.
The first is a refinance with a bank that already knows the business, where the pricing is already sharp, the asset is standard and you have financed the same kind of thing with them before. There is not much left for a broker to improve.
The second is a clean deal at a major: new asset, full financials, strong credit history, standard industry code, and a relationship manager who already holds your numbers. Clean deals get the best rates at the majors anyway, and a banker who knows the business can sometimes move faster than running a panel.
Outside those two, broker value tracks complexity. Older assets, low-doc income, past credit trouble, unusual equipment categories, cross-collateralised security. Those are the files where positioning and panel access change the answer, not just the rate.
Three questions worth asking any broker
Which lenders are on your panel for this asset type? A broker writing through two or three funders is a channel partner, not a panel broker. It rarely matters on a clean deal and matters enormously on anything else.
What structure are you recommending, and why? If the answer does not cover your tax position and how the asset will be used, the structure has not been thought about. It should be specific to the business, not whatever the broker writes most often.
Is there a broker fee? The answer should be clear, and in writing, before anything is lodged. Vagueness on that question is a poor sign at the start of a relationship.
For the wider picture on what asset finance covers, from vehicles and plant through to technology hardware and fit-out, that guide sets out the asset types, the lender categories and how deals get structured.
If you have an asset to fund and want a broker's read on structure, lender appetite and likely pricing before you approach anyone, the application form is below. Most enquiries get a response within four business hours.