Dealer finance vs broker vs bank: which is actually cheaper?
There are three ways most Kiwis finance a car: at the dealership, through a bank, or via a broker or referral service. They can cost wildly different amounts for the exact same car and the exact same you. Here's the honest comparison, what each really costs, and when each one makes sense.
1. Dealer finance
Arranged right there at the yard while you're buying the car. The upside is obvious: it's convenient and it's one stop. Sometimes there's a genuine manufacturer promotional rate that's genuinely good.
The catch is that a dealer can add a margin to your interest rate for arranging the loan. The same lender's money can cost you more through the dealer than it would direct. And the people most likely to get marked up are the ones who feel they have no other option, which is exactly backwards.
Best when: there's a real promo rate, or convenience genuinely outweighs a small saving.
2. A bank or personal loan
Go straight to a bank or an online lender for a personal loan. If you have good credit, this is often the cheapest route. The downside is banks are strict, slower, and less flexible if your credit is imperfect or your income is self-employed or casual.
Best when: you have strong credit and the time and patience to apply and wait.
3. A broker or referral service
A broker or referral service compares several lenders for you and matches you to a suitable one, usually with a single soft credit check. The good ones save you money and protect your credit score, because you're not applying at five places and collecting five hard checks. You still buy from whatever dealer or private seller you like.
Best when: you want the fairest rate without doing the legwork, or your situation isn't straightforward.
The honest summary
- Cheapest if you qualify easily: a bank.
- Most convenient: the dealer, but watch the markup.
- Fairest without the legwork or credit-score hit: a broker/referral service.
The one thing all three share: comparing beats not comparing. The single biggest way people overpay is taking the first number they're offered.
Where Fair Finance fits
We're the third kind, done straight. We're not a lender and not a dealer, so we've no reason to pad your rate. We compare our lender panel with one soft credit check and pass you the fairest rate they'll offer, and we only get paid if your loan settles. Read the full picture in our complete guide to car finance in NZ.
General information only, not financial advice.
Common questions
Is dealer finance more expensive than a bank?
Often, yes. Dealers can add a margin to the interest rate for arranging the loan, so the same lender's money can cost you more through a dealer than direct. Sometimes there's a genuine promotional rate, but it pays to compare rather than assume.
Is a bank loan the cheapest option?
It can be, if you have good credit and the time to apply. Banks are strict and slower, and less flexible on imperfect credit, so 'cheapest' only holds if you qualify comfortably.
What does a broker or referral service do?
It compares multiple lenders for you and matches you to a suitable one, usually with a single soft credit check. A good one saves you money and protects your credit score versus applying at several lenders yourself.
Which is best for me?
If you have strong credit and patience, a bank is worth a look. If you want convenience and there's a real promo, dealer finance can work. If you want the fairest rate without doing the legwork or stacking up hard checks, a referral service like Fair Finance compares the market for you.
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.