Dealer Finance vs Finance Broker

Quick answer

Dealer finance is arranged through the dealership selling the vehicle.

A finance broker helps you compare finance options from a range of lenders and can arrange finance before you negotiate or purchase the vehicle.

Neither is automatically the best choice. The important thing is to compare the interest rate, fees, loan structure, total cost and repayment conditions. ASIC’s Moneysmart recommends comparing dealership finance with other available loans before buying.

How does dealer finance work?

Many dealerships can organise finance while you are purchasing a vehicle.

It can be convenient because the vehicle and finance are handled in the same place. The available finance, however, may come from the dealership’s preferred provider or panel.

Before accepting an offer, understand:

• the interest rate

• establishment and ongoing fees

• the loan term

• any balloon payment

• early repayment conditions

• the total amount repayable

  
  

A low advertised rate does not always mean the lowest overall cost once the vehicle price, fees and loan structure are considered.

How does a finance broker work?

A finance broker reviews your requirements and compares available finance options.

The broker may consider factors such as:

• how the vehicle will be used

• how long you have been trading

• your preferred term

• cash-flow requirements

• whether you want a balloon payment

• the lender’s eligibility requirements

  
  

A broker’s role is finance. The dealership’s primary role is selling the vehicle.

It is similar to choosing a specialist: you would generally visit a dentist for a toothache rather than relying on a general practitioner to handle the dental work.

Why organise finance before visiting the dealership?

Arranging or discussing finance before shopping can help you:

• understand your likely budget

• compare options without pressure

• separate the vehicle price from the finance decision

• negotiate with greater clarity

• avoid making a rushed decision at the point of sale

  
  

Is dealer finance always more expensive?

No.

Dealer finance can sometimes be competitive and convenient. A finance broker will not automatically produce a cheaper result either.

The sensible approach is to compare the complete offers rather than assuming one channel will always be better.

Practical example

A trades business is purchasing an $80,000 ute.

The dealership provides a repayment figure based on its finance offer. The business also asks a broker to compare alternative lenders.

Instead of comparing repayments alone, it checks:

• the vehicle purchase price

• interest and fees

• the balloon amount

• the repayment term

• the cost of paying the loan out early

This gives the business a clearer basis for making its decision.

Common questions

Does using a finance broker slow down the purchase?

Not necessarily. Having business and vehicle information ready can make the process more efficient.

Can I obtain finance approval before choosing the exact vehicle?

In some circumstances, a lender may provide an indication or conditional approval. Final approval will usually depend on the selected vehicle and supporting information.

Should I tell the dealership I already have finance?

That is your choice. Knowing your budget and finance position before negotiating may help you assess the vehicle and finance separately.

Key takeaways

• Dealer finance is convenient, but it should still be compared.

• A broker focuses on the finance rather than the vehicle sale.

• Compare total costs and conditions, not just the advertised rate.

• Discussing finance early can help you buy with greater confidence.

  
  

Comparing vehicle finance?

Tattersalls Finance can help you review commercial vehicle finance options before or after you have selected a vehicle.

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