Dealer finance vs broker: which route for your car loan?

You have a car in mind, and two people want to arrange your finance: the salesperson across the desk, and a broker you found online or through a friend. This page sets the two side by side. It does not repeat our general explainers. If you want the full picture on either, read car finance broker for how brokers work, and bank loan vs dealer finance for the yard versus the bank.

We are a guide, not a lender, and we have no view on who will lend to you. What follows draws on official and consumer sources, checked November 2026.

The short answer

Use a dealer’s finance when it is a published promotion you can read in writing, or when time is tight and the total still compares well. Use a broker when you want several lenders to look at your situation without making separate applications. In both cases, get the total repayable on paper, and set it against a third offer if you can.

Neither route is automatically cheaper. They differ in who is paid, how the choice of lender is made, and when in the process you are asked to commit.

How each one works

Dealer finance. Consumer NZ says big car brands often have in-house finance, while other dealers usually arrange loans through finance companies. Loans typically involve a deposit and monthly repayments over one to five years, and the lender holds a security interest in the car until it is paid off. The dealer is part of the sale, so the finance is offered at the moment you want the car.

Broker finance. A broker is separate from the sale. It takes your details, sends them to lenders on its panel and reports back. The FMA describes the ways advisers get paid: directly by you, indirectly by commission from the product provider, or ongoing trail commission. With commission, the FMA notes you pay nothing upfront, but your options may be limited to one provider.

In both cases the loan itself is a contract between you and the lender, which must give you a written disclosure statement before you are bound.

Side by side

The points that matter most

Reach. A dealer reaches the lenders it chooses to work with. A broker reaches the lenders on its panel. Neither shows you the whole market. Ask each which lenders it can offer.

Pay. Both are usually paid by someone, and neither has to be dishonest about it. What matters is whether you can see it. A dealer’s referral fee might sit inside the loan. A broker’s commission may not be shown as a line. Ask for both in writing, and ask for the total repayable with and without any extras.

Add-ons. The dealer is in a position to offer insurance and other products at the desk. Consumer NZ says insurance can only be required if it covers reasonable risks and does not duplicate cover you already have, and that you can buy it elsewhere. It also says the GAP and credit insurance products it looked at paid out only a small share of what was collected in premiums. If an add-on is on the loan, it earns interest, so price it on its own first.

Devices. Consumer NZ notes that some lenders fit GPS immobilisers that can disable a car if payments are late, and gives an example of a $430 charge for the device plus a monthly management fee. If a dealer’s lender requires one, ask for the cost and the rules in writing.

Timing. A broker can give you a figure before you go to a yard. A dealer’s offer only appears once you are there, so the pressure to say yes is higher. If you do your comparison first, you can treat the dealer’s offer as one more number.

A worked example

This is an illustration with round numbers, not a quote from any dealer, broker or lender. You need $20,000 for five years, paid monthly.

• Dealer offer. A promotional-looking 14.95% a year, with a $400 fee added to the loan, so you borrow $20,400. The repayment is about $485 a month and you repay about $29,087.
• Broker offer, fee paid by the lender. 13.95% a year on $20,000. The repayment is about $465 a month and you repay about $27,891.
• Broker offer, with a $500 fee from you added to the loan. 13.95% on $20,500. The repayment is about $476 a month and you repay about $28,588.

The broker route with no fee costs about $1,196 less than the dealer offer here. Once a $500 broker fee is added, the gap shrinks to about $499. A lower rate did not mean the cheapest result, which is why the comparison needs the total, not the headline rate. Change the dealer’s offer to a genuine manufacturer promotion at a low rate and the picture changes again.

Our page on the comparison rate explains how to fold fees into one figure.

How to choose

1. Find out what the dealer is offering, and whether it is a promotion with conditions.
2. Ask a broker for a written offer on the same amount and term.
3. Ask both how they are paid, and for any fee in writing.
4. Ask both about the lender, its name, the security and the early repayment terms.
5. Compare totals, then compare flexibility.
6. Add a bank or credit union quote as a third point. See best car loan and cheapest car finance.
7. Pick on total cost and terms, not on who was friendliest.

Step by step

1. Set your budget before you talk to anyone.
2. Ask for the broker quote first if you can, so you walk in with a figure.
3. At the yard, ask the dealer for its offer in writing.
4. Ask what is optional in the loan, and take any add-on out until you have priced it alone.
5. Check you have a cooling-off right. Consumer NZ says you can cancel within five working days of receiving disclosure, though if you have taken the car you still have to pay for it.
6. Read the disclosure statement before you sign.
7. If you want help comparing, the /check form passes your details to a broker partner, who compares lenders for you and calls you back. Our disclosure page explains how this site is funded.

Checklist

• You have at least two written offers.
• You know how the dealer and the broker are each paid.
• You have the total repayable on each.
• You know which lender holds the contract and what security it takes.
• You know what is optional in the loan.
• You know which dispute scheme applies.

Red flags

• A dealer who will only give a weekly figure.
• A broker who will not say how it is paid.
• An add-on included without its own price.
• Any promise that a lender will say yes before it has looked at your details.
• A fee you only see at signing.
• A demand to sign today or lose the car.

If you are struggling with repayments, tell your lender early and call MoneyTalks free on 0800 345 123.

Sources

• Consumer NZ: finance at car yards, updated 6 May 2024
• Financial Markets Authority: getting advice
• Consumer Protection: getting a loan for your car
• Consumer Protection: loans and lenders
• Sorted: car loans
• MoneyTalks