Dealer finance comparisons

Dealer Finance vs Car Loan

Information verified correct on October 28th, 2016

Save money by knowing your options before jumping into a dealer financed or new car loan.

Australians have many options when it comes to financing a new car. Two of the most well-known methods are dealer loans and new car loans. It's important to know the difference between these two financing options in order to select the best one for you. Jump ahead to the price comparisons >>

Dealer loans and new car finance

With dealership finance, all the paperwork is done onsite where you are purchasing your car. Depending on where you’re obtaining your finance from, dealer finance can end up being cheaper in the long run.

With a car loan you have the option of shopping for a more competitive rate and terms that are agreeable to your budget. You will even find that some of these companies are able to approve you for the loan within 24 hours, or even pre-approval for a set amount of funds. Knowing that you already have the financing you need for a new car also gives you more leverage in negotiating the price.

Dealer financeCar loan
Interest rates
  • Can offer lower interest rates than car loans
  • Low interest rates may only be available for specific makes and models
  • Commission for the car salesman may push rates up
  • 0% rate deals may indicate a higher purchase price for the car
  • Lenders offer various rates, which means you can choose the most competitive
  • Using your car as security lets you take advantage of lower rates
Loan term
  • Typically three- to four-year terms
  • A balloon payment is usually payable at the end of the term
  • Early repayment costs may apply
  • The dealer finance rep handles the paperwork
  • No need to shop around for better offers
  • If you repay the balloon payment (instead of refinancing) you can save
  • Gives you leverage to negotiate the sale price
  • A range of competitive car loans are available
  • Your repayments will see your car loan repaid in full at the end of the term
  • You can choose your lender and your loan
  • Loans are available for new, used and classic cars
  • You need good credit to be eligible
  • It's usually only available to new vehicles
  • Balloon payments can be large and it can be difficult to save that money while repaying a loan
  • Higher interest rates may apply to certain types of loans
  • Upfront and ongoing fees may apply
Borrowers that want to buy a new car and have a deposit saved.
Borrowers that want to shop around and have the option of buying from a dealer or a private seller.

Dealer financing & car loan side by side

How much can they save?

Two neighbours, Julian and Clay, are both in need of a new car. After researching their options and choosing what kind of car they want to get, Julian opts for a car loan while Clay takes on financing option from the dealership where he made his purchase.

The two cars they purchased ended up being the same price — $20,000 — so who chose the better financing option?

Julian takes out a car loan at a 7.00% p.a. rate for a five-year period. Using a personal loan calculator he sees that he will pay $396 in monthly repayments, and will pay a total of $3,761 in interest over the course of the loan term.

Clay, who takes on dealer finance, sees that he’ll be paying $283 over the term of his loan. He’ll be borrowing the same amount of money, but his residual balloon payment of $5,000 means he’ll only be charged interest on $15,000, resulting in lower ongoing repayments.

The results

Julian continues to pay $396 every month and at the end of the five years pays his car out in full. His repayments total $23,761 for his original $20,000 vehicle purchase. Clay makes lower ongoing repayments of $283, but when it comes to the end of his five-year loan term he’s responsible for paying $5,000.

This means he will need to ensure he has this amount saved by the end of his loan term, requiring him to put away $83.33 a month to have the amount saved. All up, with the amount he’d need to save per month and his repayments, he’d be contributing $366 per month to his loan (directly or indirectly). Compared to his neighbour Clay, he’d be saving $1,800 over the loan term.

What else they need to consider

While one financing option saves saves you more in ongoing repayments, it’s not only the interest and savings that should be considered when weighing up your options. Clay and Julian should also look at the features offered to them by their lenders. For instance, are they able to pay out the loan early or make extra repayments? Do they have access to features such as a redraw facility? Do they have special benefits like discounted insurance? Clay and Julian both need to look at their financing options as an entire package before signing on the dotted line.

Compare Car Loan Interest Rates

You can use the below table to compare a range of car loans from different lenders. Click on the table headings (interest rate, loan amount, loan term etc.) to sort the table by the features you want and find the loan that will most benefit you. You can click on the name of the loan to read more about it, or click the "Go to Site" button to apply directly through the lender.

Beyond Bank Low Rate Car Loan

Discount Car Loan Offer

Apply for Beyond Bank Car Loan and enjoy a great low fixed interest rate with no ongoing fees. You'll also get access to a limited time 'Special Offer' rate on your loan.

  • Interest Rate From: 5.69% p.a.
  • Comparison Rate: 5.97% p.a.
  • Interest Rate Type: Fixed
  • Application Fee: $175
  • Minimum Loan Term: 1 year
  • Maximum Loan Term: 7 year
  • Minimum Loan Amount: $25,000
Rates last updated October 28th, 2016
Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Application Fee Monthly Repayment
Beyond Bank Low Rate Car Loan
A great rate for cars under 2 years old.
From 5.69% (fixed) 5.97% $25,000 1 to 7 years $175 Go to site More
CUA Fixed Rate Car Loan
A competitive car loan that offers flexible repayment options and no account keeping fees.
From 7.99% (fixed) 8.29% $15,000 1 to 7 years $120 Go to site More
RACV Car Loans
Enjoy this fixed rate new car loan offer from RACV. No ongoing fees.
From 6.2% (fixed) 6.73% $15,000 1 to 7 years $378 Go to site More
Latitude Personal Loan (Secured)
Can be used for whatever purpose: renovating, buying a car, booking a holiday. Funds can be in your account in as little as 24 hours.
From 12.99% (fixed) 14.2% $3,000 2 to 7 years $250 (Loans under $4000 - $140) Go to site More
Matchacar Financing
Get a tailored financing solution for buying your next car.
From 5.35% (fixed) 6.04% 1 to 7 years $350 Go to site More
RACQ New Car Loan
Apply online and receive a response within 5 business hours.
From 6.2% (fixed) 6.73% $15,000 1 to 7 years $378 Go to site More
NRMA Car Loan
Purchase a new car with an NRMA Car Loan with a fixed rate term and no monthly fees.
From 6.2% (fixed) 6.73% $15,000 1 to 7 years $378 Go to site More
AutoCarLoans can match you with a lender on their panel with rates starting from 4.99% p.a.
From 4.99% (fixed) 5.78% $15,000 1 to 7 years $381.80 Go to site More
St.George Secured Personal Loan - Fixed Rate
Get behind the wheel of your perfect car with a competitive interest rate from St.George. Get an application response within 60 seconds.
From 8.49% (fixed) 9.39% $3,000 1 to 5 years $195 Go to site More
Bank of Melbourne Secured Car Loan
A low rate personal loan from Bank of Melbourne with variable or fixed option.
From 8.49% (fixed) 9.39% $3,000 1 to 5 years $195 Go to site More
BankSA Fixed Rate Car Loan
Apply for a fixed rate car loan from multi-award winning BankSA.
From 8.49% (fixed) 9.39% $3,000 1 to 5 years $195 Go to site More

Convenience always comes with a price, and that extends to the dealer-financed car loan. Before settling for what they are offering you should compare what outside banks and non-bank lenders are offering. In many cases, the terms offered here will far outweigh the low interest rates the dealer is offering.

Always compare the rates and terms offered by a variety of different lenders before committing to anyone. There are numerous tools available to help you with this such as comparison charts and calculators. If you do your homework first, you can end up not only with a new car in your driveway, but a financing deal that works well within your budget.

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Related Posts

Beyond Bank Low Rate Car Loan "Special Offer"

A great rate for cars under 2 years old.

CUA Fixed Rate Car Loan

A competitive car loan that offers flexible repayment options and no account keeping fees.

RACQ New Car Loan

A low fixed rate loan from RACQ suitable for buying a new car.

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4 Responses to Dealer Finance vs Car Loan

  1. Default Gravatar
    Rana | July 10, 2016

    Hi , can you tell me options to get out of dealer finance once signed. I have put in $10 k for a deposit on new car and found s new one $23990 drive away. I sighed the contract and the finance after asking whether I could pay it off early without penalty as when I sell my current car I’d like to put it back on the loan and pay the rest off within 12-18mths. Looking at the contract three days ago I have noticed it is a secured fixed loan and has an exit admin fee, a $15 penalty per month fee for the rest of the 5 years , and a break fee determined by the finance company to recoup their interest losses for me paying it out early !!! The dealer finance guy definitely did not explain those fees !!!! So now the car has arrived at the dealers it’s been paid for but I have not made a finance payment yet to the bank. When I rang them they told me I could perhaps “flat cancel” ?

    • Staff
      Elizabeth | July 11, 2016

      Hi Rana,

      There are cooling off periods for vehicle finance deals but they vary in each state and the maximum is only three days, so this may have lapsed for you. If the financier did not tell you about the extra charges you can complain to them and tell them you were not aware of the charges in the contract. You can also seek independent advice from the credit and investments ombudsmen to see what kind of options you have available to you.

      I hope this helps,


  2. Default Gravatar
    Russell | August 20, 2015

    should I have to take out no gap insurance and consumer credit insurance for a dealer loan on a new car, also is it right they charge a dealer agency fee and a loan set up fee, finally 7.49 fixed doesn’t seem competitive and why should i agree to pay commission on consumer credit insurance

    • Staff
      Elizabeth | August 21, 2015

      Hi Russell,

      Thanks for your question.

      For insurance, these are generally optional extras and its up to you whether you want to take them on. It’s best to review what the insurance offers and when you will and won’t be covered, what limitations there are, etc. before agreeing to take it out. Dealer agency fees and commissions are quite common with dealer financing as this is how the finance company makes money – you can ask exactly how much commission they are making and how it is calculated on your finance amount to see how much it adds to your loan. For the amount being competitive, you might want to compare it with other offers out there to see if you are getting a good deal.

      I hope this information has been of use.



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