Head to head
Broker Finance vs Dealer Finance: Which Is Cheaper?
Go through a finance broker or take the dealer's deal — compared on rate and choice.
A broker searches several lenders to find your best rate, while dealer finance is the deal in front of you — comparing both on APR is the only way to know which is cheaper.
A broker compares several lenders to find your best rate, while dealer finance is the single deal at the forecourt — so the cheaper one depends on the APR each offers. A broker shops around; a dealer offers one deal.
Neither is automatically cheaper. A broker can beat the dealer by searching the market, but a manufacturer 0% deal at the dealer can beat any broker.
Broker finance vs dealer finance at a glance
A broker searches multiple lenders for your best rate; dealer finance is one deal, sorted on the spot. The cheaper route depends on the APR.
A broker is useful when you want one application to reach several lenders — handy with bad credit or a thin file. The dealer is useful when there's a genuine manufacturer deal. Both must be FCA-authorised, and both should show you the APR clearly.
| Broker finance | Dealer finance | |
|---|---|---|
| Choice of lenders | Several, searched for you | One deal offered |
| Rate | Best of the market | Varies, sometimes 0% |
| Convenience | Apply through the broker | Sorted at the dealer |
| Best for credit choice | Bad credit, more options | Strong manufacturer deals |
| Best for | Shopping the whole market | 0%/manufacturer offers |
Worked example: broker vs dealer finance
On a £20,000 car, a broker that finds 8.9% beats a dealer at 9.9% by hundreds in interest — but a dealer 0% deal beats them both.
Get a broker quote and the dealer's deal, then line them up on rate and total. A broker may charge a fee or earn commission, so check the all-in cost. Turn each quote into a true rate on the APR and true-cost calculator, and check the loan benchmark on the car loan calculator.
Worked example
Who each option suits
Use a broker to search the whole market or with weaker credit; take dealer finance for a strong manufacturer or 0% deal.
- Broker finance if: you want one application to reach several lenders, have bad credit or a thin file, or want the best rate without applying everywhere yourself.
- Dealer finance if: there's a genuine 0% or manufacturer-subsidised deal, or the convenience of arranging it on the spot suits you.
- Check whether the broker charges a fee or earns commission, and always compare the APR, not the monthly.
Work out your own numbers
Compare every offer on APR and total cost — broker, dealer and your own bank loan.
Check each quote on the APR and true-cost calculator, benchmark a car loan you arrange yourself, and read how dealer finance compares with a bank loan. See it all on the car finance calculator.
Frequently asked
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What does a car finance broker do?
Is a broker better for bad credit?
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