Dealer finance is convenient but rarely the cheapest. Here is how car loans arranged through a broker compare — and when dealer finance is actually fine.
When you are buying a car, the dealership will almost always offer to arrange finance on the spot. It is convenient. But convenient and best value are not the same thing.
How Dealer Finance Works
Dealer finance is typically arranged through a third-party finance provider (not the dealership itself). The dealer acts as an intermediary and typically earns a commission from the finance provider. This commission is built into the rate or fees you pay — it is not illegal, but it does mean the rate offered through the dealership is not necessarily competitive.
Dealers benefit from keeping you in the dealership for the finance conversation — once you are emotionally committed to a car, switching to a different finance arrangement feels like friction.
How Car Loan Brokers Work
A car finance broker compares car loan rates across a panel of specialist lenders — many of which do not distribute to the public directly. The broker matches your profile (personal or business use, new or used, credit history) to the right lender.
Because specialist car lenders compete for the broker's volume, rates are typically lower than what you would access through a dealership. A broker also arranges pre-approval before you shop — so you know your budget and can negotiate on the car price without the finance discussion happening simultaneously.
Rate Comparison
Dealer finance rates vary widely — from promotional 0% offers (which often come with a price premium on the car) to standard rates of 9–14%. Specialist lender rates through a broker typically range from 6–10% for good-credit applicants.
On a $30,000 loan over 5 years, a 2% rate difference saves approximately $1,600 in interest.
When Dealer Finance Is Fine
Dealer finance is a reasonable choice when:
- The manufacturer is running a genuine low-rate promotional offer (0–1.9%), and the car price is not inflated
- You are buying a new car, the rate is disclosed transparently, and you have compared it against at least one broker quote
The key is to compare — never accept dealer finance without at least checking what a broker can offer.
ABN and Business Car Finance
For business purchases — utes, vans, vehicles primarily used for work — a chattel mortgage arranged through a broker typically offers better rates and significant tax advantages over dealer finance or a standard personal loan. See our car and vehicle finance service for full details.
Contact Sam for car loan pre-approval across specialist lenders — new, used, private sale, or business vehicle.
Frequently Asked Questions
Is 0% dealer finance ever a good deal?
Sometimes — but the 0% rate is often offset by a higher car price or additional fees. Always check whether the same car is available for less if you bring your own finance.
Can a broker arrange finance for a private sale?
Yes — private sale car finance is available through specialist lenders. Not all banks offer it, which is another advantage of using a broker.
Last reviewed 27 July 2026 by Sam Elvitigala, MFAA Accredited Mortgage Broker. General information only — not personal financial or credit advice.