The Finance AlgorithmTFA

Dealer Finance vs Bank Loan Calculator

Calculator

Compare dealer finance offers with bank or credit union car loans

Free to useNo data storedAI insightsUpdated: February 2026

Dealers make money on finance, but sometimes their rates are competitive. This calculator compares dealer finance with bank or credit union loans to find the true best deal.

Enter Your Details

Enter Your Details

$
$
%

Rate offered by the dealer

$

Establishment and document fees

%

Rate from your bank or credit union

$
$

Some dealers discount if you don't use their finance

Real-World Examples

Low Rate vs Discount

$35,000 car: Dealer offers 5.9% finance. Bank offers 7.5% but dealer reduces price by $2,000 if you use external finance.

Inputs:

price:35,000dealerRate:5.9bankRate:7.5discount:2,000
Dealer finance: $38,300 total. Bank with discount: $36,800 total. The discount makes bank financing cheaper despite higher rate!

Frequently Asked Questions

Glossary

Dealer Finance
Car loans arranged through the dealership, typically from a finance company the dealer partners with.
Finance Commission
Payment the dealer receives for arranging finance - motivation to sell you dealer finance.
Pre-Approval
Getting loan approval before shopping, giving you buying power and a benchmark rate.

Disclaimer: This calculator provides estimates only and should not be relied upon for financial decisions. Interest rates, fees, and policies change frequently. Always verify information with lenders directly. This is general information, not personal financial advice. Consider seeking advice from a licensed mortgage broker or financial advisor.

Last updated: February 2026

How to Use
  1. Enter the vehicle price and deposit
  2. Add the dealer's finance rate and fees
  3. Enter your bank or credit union quote
  4. Include any price discount for external finance
  5. Compare total costs
Key Information
  • Dealers earn commission on finance - typically $500-$2,000
  • Promotional dealer rates can beat banks (but check terms)
  • Banks often have lower fees but may have slower approval
  • Some dealers discount the car if you don't use their finance
Pro Tips
  • Get pre-approval from your bank before visiting the dealer
  • Ask the dealer to match your bank rate - they often can
  • Check if 0% or low-rate deals hide higher car price
  • Credit unions often have the best rates but stricter criteria
Avoid These Mistakes
  • Accepting dealer finance without comparing alternatives
  • Focusing on low rate without seeing inflated car price
  • Not asking about price discount for cash/external finance
  • Ignoring fees when comparing rates
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