Car loans through a bank versus a dealership versus a broker

When you need to search for something online, you Google it, when you hurt your leg, you stick a Band-aid on it, but what’s the first thing that pops into your customer’s mind when they need a car loan? Do they go to a dealership, bank or go to a Broker?

Below we unpack the differences of each option to help educate your customers:

Time Pressure

A dealership has the car in stock and they want to sell it ASAP. So it might seem like keeping the process in the one place would make sense to get the deal done quickly. But due to changes passed down by ASIC on November 1, 2018 regarding risk based pricing and changes to a dealership’s remuneration model previously known as Flex Commission, the time it takes to obtain car finance from a dealership is now exactly the same as processing a car loan through a bank or a broker.


If your customers like choice, dealership finance is limited. Remember a dealership usually has only one or two lenders available to choose from. This can lower the chance of approval or receiving competitive finance options. Sometimes we even see an increase in the vehicle purchase price or a change in the trade-in price offered, to offset the lower finance option presented to a customer – this can be confusing!


As it currently stands, the Point of Sale exemption is legislation existing to allow dealerships the ability to offer finance on vehicles they are selling without the need to hold an Australian Credit Licence. The Hayne recommendation as part of the Royal Commission, has been put forward to remove this ability for dealerships to offer finance without meeting appropriate licencing requirements. This has been supported by both sides of government and is expected to pass through unchanged. We know all brokers must operate under a credit licence when presenting finance options to customers, so this is the perfect time to articulate the benefit of using a broker over a dealership. Compliance is extremely important, and as it stands, only a handful of dealerships in the entire country hold a credit licence!


Surprisingly, we still see a number of finance offers from dealerships without all fees and charges listed on quotes. Or, there has been no written quote provided as only the interest rate was shared verbally. Due to risk based pricing on all consumer car loans now adopted by all lenders, the only way to truly compare apples with apples is to see a quote in writing after a risk based assessment has been completed. At a dealership, this often happens towards the end of the transaction, where figures can change significantly once a lender understands the overall profile of the applicant. As a broker, we help you with the risk assessment up front, removing the chance of a nasty surprise before collecting the car.

Car loan through a bank

Similar to customers going directly through a bank for a home loan, choice and assistance are key reasons why customers choose a broker for their next car loan. A bank may only have one option for a customer, versus a broker accessing our panel of over 40 lenders.

When discussing the options for your customer’s car loan, the second biggest purchase that they are likely to make, it is important to share the key differences outlined above. This helps ensure they understand the benefits of using a broker over a bank or dealership for their next car purchase. There have been a number of changes to the industry and the options available over the past 12 months, and likely since your customer’s last car purchase. If you need further assistance with articulating this message, make sure you reach out to your BDM.