How car finance brokers get paid, and whether one is worth it
Most car finance brokers in New Zealand are paid by the lender when a loan settles, through a commission or introducer fee. Some also charge the borrower a fee, and a dealer who arranges your loan may earn a referral fee that Consumer NZ says can raise the cost. Whether a broker is worth it depends on your situation and on what they charge, so ask before you hand over any details.
The short answer
A car finance broker usually gets paid in one of three ways, and sometimes in more than one at once:
- The lender pays them when your loan settles. This is called commission or an introducer fee.
- You pay them a fee, either upfront or rolled into the loan.
- A dealer who arranges your finance is paid a referral fee by the lender, which Consumer NZ says can be built into what you pay.
None of these is automatically wrong. The problem is when you cannot see them. This page explains each one, shows how a fee added to a loan changes the cost, and gives you a way to decide whether a broker earns their keep. If you want to know what a broker does day to day, see our page on car finance brokers.
Where the money comes from
Lender commission
When a broker places your loan and it settles, the lender pays the broker. The amount varies by lender and arrangement, and there is no single published scale to point to. In New Zealand the money normally flows from lender to broker after settlement, so the broker is not paid if the loan does not go ahead. That is a fair arrangement in principle, but it gives the broker a reason to want the loan to settle, and possibly a reason to favour a lender that pays more.
A fee paid by you
Some brokers also charge the borrower. It might be an upfront fee, a fee at settlement or an amount added to the loan amount. The FMA publishes consumer credit fees guidelines that include sections on broker fees, and fees on a credit contract must be reasonable. If a fee is added to the loan, you pay interest on it for the whole term.
Dealer referral fees
Consumer NZ says that when a car dealer arranges a loan for you with a finance company, you will likely be charged a broker or dealer referral fee, which is what the dealer gets for bringing the business to the lender. That can raise the cost of the car or the loan. Our page on dealer commission on finance goes into the dealer side.
Insurance commission
Add-on insurance sold with a loan, such as loan protection or a mechanical breakdown policy, can also carry commission for whoever sells it. The FMA’s fees guidelines cover commission on credit-related insurance. This is a description, not advice to buy or avoid any product. If an add-on is offered, ask what it costs, who earns commission on it and whether it is optional. See mechanical breakdown insurance.
What a fee added to the loan really costs
Say a broker adds a $500 fee to your loan. This is a hypothetical figure to show the method, not a typical charge.
| Without the fee | With a $500 fee added | |
|---|---|---|
| Loan | $15,000 | $15,500 |
| Illustrative rate | 14% a year | 14% a year |
| Term | 4 years | 4 years |
| Repayment per month (approx.) | $410 | $424 |
| Total repaid (approx.) | $19,680 | $20,330 |
On those assumptions the fee costs about $14 a month, and about $650 more over the term than the $500 itself, because you pay interest on it. The point is not the exact figures. The point is that a fee rolled into the loan is not free, and it costs more than its face value.
Use the repayment calculator with your own numbers, and ask for the total repayable in writing.
Why the arrangement matters to you
Commission is not a secret in most industries, but in car finance it is easy to miss because it is rarely on the front page of a quote. The Commerce Commission’s 2021 review of motor vehicle financing and add-on products found that customers did not always know what products they were buying, which is a reminder to read the contract line by line. Three habits help:
- Ask for the numbers before the pitch. A rate, fees and total repayable you can compare beat any story about how well connected someone is.
- Compare like with like. A cheaper weekly figure on a longer term can cost more overall. Put each offer on the same term before you judge it.
- Take the paperwork home. You are entitled to a disclosure statement before you sign, showing the total to repay, all fees and how to cancel or apply for hardship help. Read it away from the sales desk.
Is it better to use a broker or go direct?
The honest answer is that it depends on you. Here is a fair way to think about it.
Going direct tends to suit you if:
- Your credit file is clean and your income is steady.
- You already bank with a lender that offers car loans.
- You are happy to compare two or three offers yourself.
A broker or referral service may help if:
- Your credit file has defaults, a judgment or a short history.
- You are self-employed, on a benefit, on a temporary visa or in another situation lenders treat differently.
- You do not know which lenders look at your kind of application.
- You want to avoid making several applications, each with its own credit check.
The decision should rest on the final numbers. After you add up the rate, every fee and the term, is the broker’s route better than the best deal you could have got on your own? If you cannot tell, you do not have enough information yet. Our guide on dealer finance vs broker vs bank sets the options side by side.
Questions to ask before you hand over details
- How are you paid, and by whom?
- Do I pay you anything? When, and is it refundable?
- Will any fee be added to my loan?
- Which lenders can you place me with, and is that all of them or a few?
- Do you give regulated financial advice, or do you only introduce me to lenders?
- Which dispute resolution scheme do you belong to?
- Will you give me the rate, every fee and the total repayable in writing before I sign?
- Will you run a soft credit check or a hard one, and how many?
A good broker answers all of these without fuss. If they will not, that tells you what you need to know.
How to check a broker
- Financial Service Providers Register. Search the business name. The FMA says that registration does not mean a business is licensed or regulated by the FMA, so treat it as the first check, not the last.
- Dispute resolution scheme. All businesses offering financial services to retail customers must belong to an approved independent scheme.
- Fees in writing. Get the fee and commission position in writing before you apply.
- Reputation. Look for patterns in complaints, and be careful about reviews you cannot verify.
Regulation of consumer credit moved from the Commerce Commission to the FMA on 1 July 2026, so the FMA is the regulator to look to.
Red flags
- A promise of approval before anyone sees your income and credit. Nobody can promise approval.
- An upfront fee for finding you a loan.
- No clear answer about how they are paid.
- Pressure to sign today.
- Several hard credit checks at once. See whether applying hurts your credit.
- Only the weekly figure quoted. Ask for the rate and the total.
- Add-ons bundled into the loan without a clear explanation of the cost.
Where Fair Finance sits
Fair Finance is a lead-generation referral service. It is not a lender, not a broker and not a financial adviser, and it gives no personalised advice. It does not recommend a lender or a loan. You give one application and Fair Finance runs one soft credit check, then sends the application to a panel of approved New Zealand lenders, each of which decides case by case. The lender pays Fair Finance a referral fee only if a loan you apply for settles. That fee does not change your rate or your repayment, and there is no charge to you. The help page on lender or broker and the how it works page set it out in short form.
Every model has a conflict of interest of some kind: a broker may favour higher commission, a dealer earns on both the car and the loan, and a referral service is paid only when a loan settles. The sensible response is to ask each one what theirs is.
Checklist
- Asked who pays the broker and how much
- Asked whether any fee is added to the loan
- Rate, every fee and total repayable in writing
- Checked the business on the Financial Service Providers Register
- Asked about the dispute resolution scheme
- Compared with a direct quote from a lender or bank
- Soft check first, not several hard checks
- Add-ons explained and confirmed as optional
General information only, not financial advice. Commission arrangements and rules change, so check the official pages below.
Sources
Common questions
How do car finance brokers make money?
Usually from the lender, as a commission or introducer fee paid when your loan settles. Some brokers also charge you a fee, either upfront or added to the loan. Ask in writing which of these apply, because the answer changes what the broker has to gain from a particular lender.
Does a broker's commission make my loan dearer?
It can. If the broker's fee is added to the loan, you borrow more and pay interest on it. If the lender pays the commission out of its own margin, the cost may be built into the rate or fees instead. Ask for the rate, every fee and the total repayable, and compare them with a direct quote.
Are car finance brokers worth it?
They can be if your credit file has marks or your situation is unusual and you do not know which lenders to approach. They are less useful if you already qualify for a bank loan and can apply direct. The test is simple: after all fees, is the deal better than the one you could have got yourself?
Is it better to go direct to a lender or use a broker?
Going direct is usually cheaper and cuts out a middleman, but you only see one lender's offer. A broker or referral service can widen your options and save repeated applications. Compare a direct quote with whatever the broker finds, and do not accept pressure to decide on the spot.
Do I have to pay a broker upfront?
Be very wary of any upfront fee for finding you a loan, especially one paired with a promise of approval. Nobody can promise approval, and a legitimate business should tell you plainly what it charges and when. If you are unsure, check the business on the Financial Service Providers Register and ask which dispute resolution scheme it belongs to.
How does Fair Finance get paid?
Fair Finance is a referral service, not a broker, lender or financial adviser. It is paid by the lender only if a loan you apply for settles, and that never changes your rate or repayment. There is no charge to you for using it.
See your repayments, then get a fair rate.
One application, one soft credit check, no obligation. We match you to the lender most likely to give you a fair go.