Broker or bank: what’s the difference?
What a finance broker does that a bank doesn’t, how brokers are paid, the rules they work under, and how to check a broker is licensed before you start.
Jane BrookerFinance broker · Updated 6 October 2026 · 4 min readA bank can only offer its own loans. A broker compares loans from a panel of lenders, helps you choose, and handles the application through to settlement. Brokers are usually paid a commission by the lender, and some also charge a fee. Either way, it must be disclosed to you.
When you need finance, the first instinct is often to call your bank. Sometimes that’s the right move. But it’s not the only one.
Here is how a bank and a broker differ, in plain English.
Side by side
| Your bank | A broker | |
|---|---|---|
| Loans on offer | The bank’s own | Loans from a panel of lenders |
| Who you deal with | The bank’s staff | The broker, usually start to finish |
| Paperwork | You fill in the bank’s forms | The broker helps prepare it and sends it to the lender |
| If it doesn’t fit | That bank says no | The broker can look at other lenders |
| How they’re paid | The bank earns interest and fees | Usually a commission from the lender, and sometimes a fee |
What a broker does
A broker sits between you and the lenders. A good one will:
- Listen first. What you’re buying, what you can afford, and what matters to you.
- Compare lenders. Banks, non-bank lenders and specialist lenders. I compare 40+.
- Pick the right lender before applying. Each lender has its own rules. Choosing well the first time saves time and avoids extra credit enquiries.
- Handle the paperwork. I tell you exactly what’s needed, prepare the application and deal with the lender.
- Stay with you to settlement. I keep you updated until it’s done.
When your bank might suit you
- You already have a great relationship with your bank and they offer you a good deal.
- You want everything with one bank, and the loan suits you.
- It’s a simple loan and you’re happy to compare offers yourself.
It’s fine to ask your bank and a broker, then compare.
How brokers are paid
Most brokers are paid a commission by the lender when the loan settles. Some also charge you a fee.
For personal loans and car loans, the law sets out what a broker must tell you:
- A Credit Guide, as soon as it’s likely they’ll help you. It lists the lenders they use most, the commissions they’re likely to receive, any fees, and how to complain.
- A written quote before any broker fee. If a broker charges you a fee, they must give you a quote first, and you must accept it before they help you.
- A disclosure document when they suggest a particular loan, showing the fees and the commission they expect to receive.
On car loans, any broker fee must also be shown in the loan contract. And since November 2018, a lender can’t pay a car dealer or broker more for setting a higher interest rate on a consumer car loan. ASIC banned these “flex commissions”.
Ask me how I’m paid on your loan. I’ll tell you straight.
The rules brokers work under
In Australia, anyone who arranges consumer credit, like a car loan or a personal loan, must hold an Australian Credit Licence or be authorised as a credit representative of someone who does. ASIC, the government regulator, oversees them.
For personal and car loans, a broker must:
- Ask about your situation and what you need, and take reasonable steps to check it.
- Not suggest a loan that is unsuitable for you.
- Give you a Credit Guide, and disclose fees and commissions.
- Belong to the Australian Financial Complaints Authority (AFCA), a free, independent complaints service.
Business loans are treated differently, because the consumer credit law mainly covers personal borrowing. I work the same way on a business loan as on a car loan.
How to check a broker
- Ask for their licence or credit representative number. It should be on their website and their documents.
- Search it on ASIC’s Professional Registers. Being on the register means they’re authorised. It doesn’t mean ASIC endorses them.
- Read their reviews, ideally on Google, where the business can’t edit them.
- Ask how they’re paid. A good broker will tell you without fuss.
My details: I’m Credit Representative 558874 of COG Aggregation Pty Ltd, which holds Australian Credit Licence 389527. You can read my Google reviews or meet me first.
If something goes wrong
Talk to me first. Most problems can be fixed with a phone call. If we can’t sort it out, you can take it to AFCA. It’s free and independent. Call 1800 931 678 or visit afca.org.au.
