Dealer finance often comes with a very low rate, quoted on the spot. The number is usually genuine. But it isn’t what leaves your account each month.
A real example: 7.3% vs 7.9%
A customer buying a brand-new ute was quoted 7.3% by the dealership. Our best lender for him at the time came in at 7.9%. On paper, we looked 0.6% dearer.
Once the dealership’s fees were added up, their rate worked out closer to 9%. Our lender charged close to no fees, so the “dearer” option was almost a full percent cheaper.
Real example, details changed.
Where the gap comes from
The headline rate leaves out the fees: a monthly account-keeping fee and others that go by various names. They’re usually a fixed dollar amount, not a percentage. A $20 monthly fee barely moves the needle on a $100,000 loan, but on a $20,000 loan it’s a much bigger bite.
So compare the dollar figure leaving your account each month, fees included. Not the number on the ad.
What happens after you sign
Dealer finance is there to sell you the vehicle. Once the sale is done, that relationship is generally done too. Nobody asks what the exit fees look like if you sell it in 12 or 18 months.
With us, you’ve got someone to call:
- Once a year we compare current rates against your loan and flag it if a refinance would cut your repayments.
- When you sell, pay out or refinance, we handle the lender: the paperwork, the questions, the call-centre queue.
- When you buy the next one, we already know your plans. The ute dealership isn’t financing the prime mover you buy in three months’ time.
Before you sign at the dealership
One phone call gets you a real comparison: actual repayments, fees included, on your numbers. It costs nothing and doesn’t touch your credit file.
More: shopping for finance without wrecking your credit file and why it’s worth using a broker.
Common questions
Can I use my own finance at a dealership?
Yes. You’re never obliged to take the dealer’s finance: arrange your own loan and your lender settles with the dealership like any other buyer.
Can I find out what I can borrow first?
Yes. We can work out what you’re likely to be approved for before you shop, without an enquiry on your file, so you negotiate knowing your finance is lined up.
Can I refinance dealer finance later?
Usually, yes. Ask for a payout figure and check your contract for early payout fees; a refinance makes sense when the saving outweighs the exit costs.
Does the dealer earn money on the finance?
The dealer may earn a commission on the finance, which is normal but worth knowing. You’re also only seeing the lenders that dealer works with, often just one.
Have a question about your deal?