Broker vs Bank vs Dealer Finance

When it comes to financing a car, you've got three main options: use a finance broker, go direct to your bank, or take dealer finance. Each has pros and cons — and the best choice depends on your situation.

Let's break down each option honestly.

Option 1: Finance Broker

A finance broker (like us) acts as a middleman between you and multiple lenders. We don't lend money ourselves — we find the best deal from our panel of lenders.

Pros

• Multiple lenders, one application — we compare options so you don't have to
• Often better rates — brokers have access to wholesale rates and specialist lenders
• We do the legwork — paperwork, negotiations, settlement handled for you
• Specialist knowledge — we know which lenders suit different situations
• No pressure — we're not trying to sell you a car at the same time

Cons

• Broker fee — most brokers charge a fee (though this is often offset by better rates)
• Extra step — adds a party to the transaction
• Quality varies — not all brokers are equal (some are just commission-chasers)

Best For

People who want the best rate, don't have time to shop around, or have a situation that needs specialist lending (self-employed, credit issues, unusual income).

Option 2: Direct to Bank

Going to your own bank (or any bank directly) for a car loan is the traditional approach. You apply directly with the lender.

Pros

• Existing relationship — your bank knows your history
• Simplicity — one application, one lender
• Bundling discounts — sometimes discounts if you have other products with them
• No broker fee — you deal direct

Cons

• Only their products — you only see what that one bank offers
• Not always competitive — banks don't always have the best car loan rates
• Rigid criteria — if you don't fit their box, you're out
• You do all the work — comparing, applying, following up

Best For

People with a strong relationship with their bank, excellent credit, and simple financial situations.

Option 3: Dealer Finance

Dealer finance is arranged through the car dealership. They have relationships with lenders (or finance arms of car manufacturers) and arrange the loan as part of the sale.

Pros

• Convenience — one-stop shop, finance arranged on the spot
• Manufacturer specials — sometimes genuinely good rates on new cars
• Easy — minimal effort on your part

Cons

• Higher rates (usually) — dealers often mark up rates for their own profit
• Pressure tactics — finance is a profit centre, expect the hard sell
• Limited options — only their lender panel
• Bundled extras — often pushed to add insurance, warranties at inflated prices
• Conflict of interest — they want to maximise their profit, not minimise your cost

Best For

Manufacturer finance specials (0% or very low rate promos on new cars), or people who prioritise convenience over cost.

How to Choose?

Here's a quick decision framework:

1. Get pre-approval from a broker first — this gives you a benchmark rate
2. Check if your bank can beat it — especially if you have other products with them
3. Ask the dealer what they can do — but negotiate the car price separately
4. Compare total cost — not just the interest rate, but all fees and charges

What About Online Lenders?

Online lenders (like those you see advertising on comparison sites) are essentially the same as going direct to a bank — you're dealing with one lender. They can be competitive, but you're still only seeing one option.

The Bottom Line

There's no universally "best" option — it depends on your situation. But if you want someone to do the legwork and find you a competitive rate without the dealership pressure, a broker is usually the way to go.

Want to see what rate we can get you? Apply online and we'll come back with options — no obligation.