Is car dealer finance your best loan option? 

Car dealer finance is a car loan offered to buyers at the point of purchase through a credit provider, which may or may not be the buyer’s best option. Loans offered by new and used vehicle dealers, or through the vehicle manufacturer, are made via an arrangement with usually the one credit provider. The interest rates, terms, conditions and other features of the loan may or may not represent the best offer available in the motor vehicle finance market for that buyer.

While it may seem fast and convenient to simply let the dealer arrange your loan, with the possibility of a cheaper and/or more suitable loan available, buyers are strongly advised to consider their options before committing.

The loan may suit your requirements, or it may not. With the price of new vehicles, loan repayments can be significant for many buyers. When considered over the full term, it is surely worth ensuring you have committed to the loan that will deliver on your objectives and represents your best rates and lowest repayments. As specialists in motor vehicle financing, we explain the specifics of loans offered by vehicle dealers, how we may offer a better solution, and ways to compare loan offers.

What is car dealer finance?

Car dealer finance are loans for motor vehicles offered by the dealership or by the manufacturer of that vehicle brand. Major vehicle brands typically offer their branded loans on new vehicles across their dealer network. This is often advertised as part of their promotional campaigns. Credit offers may be available through both new and used vehicle sellers. Buyers are not compelled to take up any offer of credit offered by either a dealer or any credit provider.

These loans are typically arranged through a partnership between the seller or brand and a credit provider, usually a finance company. Some dealers may have a partnership with a finance broker, such as Jade Car Loans, rather than the one finance company. Brokers offer a greater selection of lenders and a different proposition than the one credit provider option, which we explain below.

A credit provider number should be displayed on loan offers and advertisements for credit made by dealers. The name of the company providing the loan should also be displayed. As the loan is arranged through another company, they may involve a commission being paid to the dealer by the credit provider. This may be included in the fees and charges to the borrower. Read on for information on how to compare offers.

Are these the best offers a buyer may be able to source? We cover off on a number of aspects for buyers to consider.

Dealer have your most suitable loan type?

One of the first issues to consider is if you are being offered the most suitable type of loan for your circumstances and your preferences. Private buyers should be able to select from a Secured Car Loan and an Unsecured Personal Loan. A secured format loan is the most popular and most affordable for new cars.

Business buyers need to have their choice of Chattel Mortgage, Leasing and Commercial Hire Purchase. Ensuring the loan will work with their accounting method and practices, and approach and preferences to their balance sheet and tax.

While the names of these loans and many of the features can be the same across the lending market, the conditions, loan amounts and criteria for approval can be different for different lenders. If a buyer does not fully meet the criteria of the dealer’s lender, they may be offered a higher rate or their application rejected. Having access to sourcing a loan from as many lenders as possible through a broker, rather than only being offered one choice, may ensure a buyer is applying for the loan that is right for their needs.

Look at the loan conditions. Does the offer include the loan amount you are looking to borrow? If not, it may be that provider does not offer loans to that amount or that your borrowing capacity was assessed at that limit. Criteria around approvals can vary with lenders. 

Not all dealers may offer all loan options such as Low Docs Car Loans for new businesses and loans for buyers applying for finance for the first time.

Does the repayment term offered suit your requirements? If not, another lender may approve your preferred term.

Comparing Car Dealer Finance Rates

The motor vehicle finance market is one of the largest Australian lending markets. While lenders can use the cash rate as set by the RBA as a guideline or baseline, lenders set their own car loan interest rates. Resulting in a market with varying rates for both private and business vehicle finance.

Compare the rate offered by the dealer with others in the market. Use our current rates to see what we are currently achieving. To easily compare rates, use our Finance Calculator. Get repayment estimates based on any interest rate to see how the dealer’s rate compares.

Watch out for 0% interest rate advertisements. This is not a practice used by all manufacturers and dealer loans but can crop up at times. These are usually promotions. The 0% rate is only available for the first few months or promotional period. After that, a much higher rate applies.

Alternatives to Car Dealer Finance

Buyers do have alternatives to accepting a loan offer from the vehicle seller. They can apply directly to a bank or other credit provider or use the services of a motor vehicle finance broker such as Jade Car Loans. We won’t delay the process of securing a loan as both the dealer’s credit provider, banks and other lenders, and brokers, need to go through similar application assessment and approval processes. Some are faster than others and we have many applications approved within 24 hours.  When approving finance for private buyers, all credit providers must adhere to the Consumer Credit Laws as regulated by ASIC.

Brokers provide buyers with the advantage of having their best offers sourced from many lenders, not just the one. This can affect not only the interest rate, but the amount approved for the loan, terms, conditions, and deposits required.

Fees and charges can also vary with lenders. These are not always known until a quote is provided. While sourcing quotes from multiple lenders may be required, it may result in issues with the buyer’s credit profile. Using a broker allows buyers to secure their best rate from across many lenders without impacting their credit rating.

We also assist with explaining the fine print, finding the most suitable lender and the most suitable loan product.

Before simply accepting car dealer finance, contact Jade Car Loans 1300 000 003 for a quick quote to compare our cheap rates and tailored loans.

DISCLAIMER: IN REGARD TO MISREPRESENTATIONS AND ERRORS CONTAINED IN THE MATERIAL AS PRESENTED, LIABILITY IS NOT ACCEPTED. THE DETAILS AND CONTENT IS PROVIDED FOR CAR BUYERS AND INDIVIDUALS AND BUSINESS SEEKING FINANCE PURELY AS GENERAL INFORMATION. THIS IS NOT PROVIDED AS THE ONLY SOURCE OF FINANCIAL INFORMATION. ANYONE THAT CONSIDERS THAT NEED FINANCIAL ADVICE ABOUT THEIR SPECIFIC REQUIREMENTS SHOULD SEEK THEIR OWN FINANCIAL ADVISOR.