Car Finance Broker vs Dealership Finance: What's the Difference?

When you’re buying a vehicle, these are usually the two most common ways you can arrange your financing. You can arrange finance through the dealership selling you the vehicle, or you can use a finance broker to explore your options separately from the vehicle purchase. Both routes help you finance a vehicle. But the way they work can be quite different.

So what’s the difference between dealer finance and broker finance, and what should you consider before choosing how to arrange your next vehicle?

What is Dealership Finance?

When you arrange financing through a dealership, the dealer introduces you to one or more finance providers as part of the vehicle purchasing process. You choose your vehicle, discuss your finance requirements with the dealer, and the dealer arranges the credit application. This can be convenient because everything happens in one place. However, the finance options available to you will depend on the lenders and finance products that the dealership has access to. Some dealerships may work with a single finance provider, while others may have relationships with several lenders.

The important question is: how much choice do you actually have?

What is Finance Broker Finance?

A finance broker acts as an intermediary between customers and lenders. Rather than being tied to the purchase of one particular vehicle from one particular dealership, a broker’s primary role is to help customers explore available finance options. A broker may work with a panel of lenders, meaning your application can potentially be considered across multiple finance providers, depending on the broker’s panel, your circumstances and each lender’s criteria.

Broker finance vs dealership finance

Finance Broker

Dealership Finance

Where you arrange finance

Separately from the vehicle retailer

Through the vehicle retailer

Access to lenders

Depends on the brokers panel - usually a wide panel

Depends on the dealership's lender relationship

Vehicle choice

Can shop across different dealers

Centred around that dealerships stock

Finance-first approach

Usually vehicle first

Can arrange finance before choosing a vehicle

Usually linked to a vehicle purchase

Can compare available finance options

Depends on dealership and lender relationship

Vehicle and finance are separate decisions

Often handled together

The exact options available will always depend on your circumstances, the lender’s criteria and the broker’s or dealership’s relationships.

Why use a vehicle finance broker?

You can separate the vehicle from the finance. One of the biggest advantages of using a broker is that you don’t have to arrange your finance through the person selling you the vehicle. You can explore finance options and then look for a vehicle that fits your requirements and budget. That could mean buying from a main dealer, independent dealer or even a private seller, depending on the finance product and lender requirements. The finance a the vehicle become two separate decisions.
You may have access to multiple lenders. A broker with a panel of lenders can consider applications against the criteria of different finance providers. That doesn’t mean every lender will accept every application, and it doesnt mean a broker can guarantee a particular rate or approval. It doesn’t mean that there may be more than one potential route to explore. At Motor Loans R Us, we work with a wide panel of lenders across a range of customer circumstances. One application. Multiple potential lending routes.
Your circumstances don’t have to fit a single lender’s customer profile. Not every customer has the same financial circumstances. You might have an excellent credit history. You might be rebuilding your credit. You might be self-employed. You might have changed jobs recently. You might have a complicated income structure. Or you might simply want to understand what finance options are available before choosing a vehicle. Different lenders have different criteria.
You can shop around for your vehicle. Using a broker can allow you to approach the vehicle search differently. Instead of: Dealer → Vehicle → Finance, you can take this approach: Finance → Budget → Vehicle → Dealer. This can give you a clearer idea of your financial position before you start shopping.

Is broker finance cheaper than dealership finance?

Not necessarily. There is no universal rule that one will be cheaper than the other. The cost of finance depends on factors including:

The lender
Your individual circumstances
Your credit profile
The vehicle
The amount borrowed
The deposit
The term
The APR
The finance product
Any applicable fees

The right comparison is the actual finance agreement being offered. Look at the APR, monthly payment, deposit, term and total amount payable rather than focusing on one figure in isolation.

What about finance comission?

This is another area where transparency matters. Motor finance brokers and dealers may receive commission or other remuneration from lenders. FCA rules require credit brokers to disclose the existence and nature of commission where it could affect their impartiality or have a material impact on a customer’s decision, and relevant information must be provided prominently and in good time.

The FCA has also taken significant action around motor finance commission arrangements, including banning discretionary commission models that allow brokers or dealers to influence customers’ interest rates in order to increase commission.

Any commission a dealer or broker receives has no effect on the rate offered or the amount payable under any finance agreement.

Why choose Motor Loans R Us?

This is where we believe the broker model can make a real difference.

At Motor Loans R Us, we put you, the customer, in control. We are a vehicle finance broker, not a lender. Our role is to help you explore the finance options available to you through our panel of lenders.

We start with you, not a vehicle. You don’t have to walk into a dealership and negotiate finance around the vehicle you’ve already fallen in love with. You can start by finding out what you could provisionally be approved for and the criteria for that vehicle. Then you can shop for a vehicle that fits your requirements and budget.

We work with a panel of lenders. We have access to a wide panel of finance providers, giving multiple lending routes rather than relying on a single lender. Your application will be considered against the criteria of the lenders available to us, based on your individual circumstances.

We finance more than cars. Our finance isn’t limited to traditional car purchases. Depending on the lender and your circumstances, we can help customers explore finance for:

Cars
Vans
Motorhomes
Caravans
Motorbikes

So whether you’re replacing the family car, upgrading your work van or finally buying the motorbike you’ve wanted for years, the finance journey starts in the same place.

We keep the application simple. You can apply online without having to visit a dealership first. Your application will be assessed, and potential finance options explored through our lender panel. Where appropriate, a soft search will be used during the initial application process, which doesn’t affect your credit score.

The Motor Loans R Us approach

You shouldn't have to choose your financing simply because it's the option presented to you at the dealership. You should be able to understand your options, know what you're committing to and make your own decision about the vehicle and finance that works for you.

That's why our process starts with you.

Find out what you could be approved for with Motor Loans R Us.

Ready to explore your options