When you’re in the market for a new ride, included in the many options you have when it comes to financing are a car dealer and a car loan broker. Ever wonder which is the better option when you’re thinking of buying a car? This article should help you figure out the answer.
You see, when it comes to car finance, everyone wants to get the best possible deal. The trouble is many are unsure how to find the best deal. According to Finder’s ‘Car Loan Statistics’ of 2021, a significant 25% of Australians with a car loan believed they could be getting a better deal.
So, what’s the solution? It starts with getting the right advice. But where should that car loan advice come from? What is the difference when it comes to a car finance broker vs. a car dealer? And who will be able to help you get the right car loan for your specific circumstances?
Car Loan Broker vs. Car Dealer
When choosing between a car loan broker and a dealer for car finance it’s important to first of all understand the differences between the two. Both can help you obtain a car loan, but each one uses different methods and has specific advantages and disadvantages.
What is a Car Finance or Car Loan Broker?
Much like a mortgage broker helps you secure a home loan, a car loan broker will help you secure a car loan. They’ll typically start by comparing suitable loan products from their available panel of lenders. This will help them to identify which car financing option is going to provide you with the best fit for your circumstances.
One of the benefits of a car loan broker or a car finance broker is they can usually give you access to a wider range of loan options. These often come with the potential for better interest rates or more flexible loan terms.
What is Car Dealership Financing?
Car dealership financing is more like a one-stop shop for buying a car. You decide which car you want to buy, and the dealer will organise the finance for you using the dealership’s preferred lender. This process can be quite quick, but it can also be limiting in terms of your loan options.
Choosing Between a Broker and Dealer for Car Finance
If you’re ready to buy a new car, you’re probably already weighing up whether to use a car loan broker versus a car dealer. Before making this decision, it’s important to look at a few different variables:
- Interest rates and terms: Car loan interest rates in Australia can vary hugely depending on the lender. While some lenders may offer rates as low as 5%, others will be charging an enormous 17%!
- Flexibility in loan customisation: Greater flexibility can allow you to customise a car loan to suit your needs. Without flexibility, you may find yourself stuck with a car loan that includes a sizeable balloon (a lump sum payment due at the end of the loan term) or a loan that has a longer or shorter term than you need.
- Speed and convenience: No one wants to run around and jump through multiple hoops to secure a car loan. If the process is going to significantly delay your purchase or create enormous amounts of stress, it may not be worth it.
- Potential hidden fees or costs: The car loan with the lowest interest rate could also be the loan with the highest fees. Lenders may include a range of fees and costs, including annual or monthly processing fees or additional charges to pay out the loan early.
Muscle Money – Your Best Options for Car Financing
At Muscle Money, our team is committed to helping new car buyers find the best loan to suit their needs. When you choose to work with Muscle Money, you gain access to:
1. A personalised approach to car finance.
2. A tech-driven platform with 24/7 pre-approval.
3. Unparalleled access to car loan products.
4. A quick and simple application process.
5. A team of advocates who will ensure your credit score is protected.
6. The peace of mind that comes with knowing you’re getting the right loan.
Ultimately, the decision to use a car loan broker over a car dealer doesn’t need to be complicated. While there are pros and cons to dealer financing, the benefits of a car finance broker are unparalleled. With the help of Muscle Money, you can be driving your dream car in no time. Get started now with our online application or give us a call for some free and friendly advice.
Caleb Waye-Harris, Senior Manager of Asset Finance at Muscle Money, has almost 15 years of relevant experience in the finance industry. His extensive background includes project management, consumer and commercial lending and asset-based lending.
