Becoming a credit broker

[Scotsjon]

Hi Everyone,

I’m looking at starting a new business as a car finance broker, I’m not particularly happy with my current position and want to do something related to cars, although I’m not interested in car sales.

Has anyone worked in this field or do you know anyone that has? I would be interested in your views on this part of the industry.

I am aware that the process of getting registered with the FCA can be convoluted and not for the amateur, with that in mind I have found a firm called ensured compliance who can take care of the application and help with ongoing compliance, has anybody any experience with these guys or similar firms? With regards to compliance I have an FSRE qualification which I think satisfies the relevant qualifications element of compliance.

Does anyone have any experience of sourcing the financial products wholesale? That feels like essential knowledge that I don’t have at the moment.

Please feel free to express your opinions on this and any hints or tips you may have, I’m kind of in a vacuum at the moment and input from this community would be appreciated


Many thanks

Jon

[anonymous-user]

What’s your competitive advantage?
How do you compete in marketing and sales expenditure with the commoditised brokers?
Is the deal margin high enough to make it worth your while?
How do you make your money, commission or arrangement fee?

[BeeBopp]

I've run a big lender, and a big broker.

Credit brokering is an FCA regulated business. You will need a regulatory business plan and you can find a template on the FCA website, as well as other information on the authorisation process (https://www.fca.org.uk/firms/authorisation).

The name of the brokering game is volume. Where will you source leads? Lenders will only want to work with you if you can bring them quality volume.

Most brokers are either digital marketers who find volume on the internet, or retailers who want to use finance to help drive sales. There are A LOT of a motor finance brokers so unless you have new angle or shtick, you will find this hard. Most motor finance brokers have been in the motor trade for a while so if they don't have a new angle or shtick, they have the connections to funnel volume to themselves.

I wish you luck but it sounds like you have a bit of figuring out to do. Happy to answer any specific questions you may have.

[blue_haddock]

BeeBopp said:

I've run a big lender, and a big broker.

Credit brokering is an FCA regulated business. You will need a regulatory business plan and you can find a template on the FCA website, as well as other information on the authorisation process (https://www.fca.org.uk/firms/authorisation).

The name of the brokering game is volume. Where will you source leads? Lenders will only want to work with you if you can bring them quality volume.

Most brokers are either digital marketers who find volume on the internet, or retailers who want to use finance to help drive sales. There are A LOT of a motor finance brokers so unless you have new angle or shtick, you will find this hard. Most motor finance brokers have been in the motor trade for a while so if they don't have a new angle or shtick, they have the connections to funnel volume to themselves.

I wish you luck but it sounds like you have a bit of figuring out to do. Happy to answer any specific questions you may have.

On a similar vein I worked in car leasing for a few years and it's the sort of thing that everyone thinks is dead sole and easy to do from your back bedroom.

But the big boys can undercut you and the guys who have been doing it for years have all the contacts and tricks of the trade so all these new bedroom firms end up being busy fools working for tiny margins just to get trade put through the books.

This sounds as if it will be a similar vein....