The Finance Algorithm

Dealer Finance vs Bank Loan Calculator

Compare dealer finance offers with bank or credit union car loans

Updated October 2026Built and checked by MaverickHow it's calculatedReport an error

Your numbers

Updates as you type
$
$40k
$
$5k
%
6.9%

Rate offered by the dealer

5
$
$500

All fees on the dealer finance quote: the lender's establishment fee, any dealer fee and ongoing fees over the loan

%
7.9%

Rate from your bank or credit union

5
$
$200
$
$0

Some dealers discount if you don't use their finance

The button asks our AI to explain these figures in words.

Dealer finance vs bank loan

Winner

Dealer loan

cheaper total cost

Total savings

$696

vs the other option

Monthly delta

$17

difference per month

Bank price paid

$40,000

after external-finance discount

What you'd pay each month

Same car, two financing paths. The cheaper option on this chart isn't always the overall winner: check total cost next.

$691Dealer (6.9%)$708Bank (7.9%)

All-in cost: principal + interest + fees + deposit

Includes any dealer discount applied to the bank-finance path. This is the number to optimize.

$46,984Dealer (6.9%)$47,680Bank (7.9%)

Where the money goes

Principal varies because the bank path uses the discounted price.

$41,984Dealer (6.9%, 5y)$42,680Bank (7.9%, 5y)
Negotiation tip
Get bank pre-approval, then bring it to the dealer
Dealers earn commission on finance, so they have room to match or beat your bank rate. Pre-approval gives you the leverage to ask, and a hard ceiling to walk away at if they won't.

How it works

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.

  1. 1Enter the vehicle price and deposit
  2. 2Add the dealer's finance rate and fees
  3. 3Enter your bank or credit union quote
  4. 4Include any price discount for external finance
  5. 5Compare total costs

The figures today

As of 7 November 2026, the lowest car loan rate from a bank or lender is 5.74%, from Westpac's Car Loan, while the typical best across 42 institutions is 6.99%. The lowest carmaker finance rate is 2.70%, from Chery Motor Finance's Chery 4.46% EV Comparison Rate Offer, while the typical best across 12 institutions is 4.99%.

Car loan rates

Worked examples

Low Rate vs Discount

A $35,000 car with a $5,000 deposit. The dealer offers 5.9% over 5 years with $500 of fees; a bank offers 7.5% with $200 of fees, and the dealer takes $2,000 off the price if you don't use its finance.

Vehicle price
$35,000
Deposit
$5,000
Dealer finance rate
5.9%
Dealer term (years)
5
Dealer finance fees
$500
Bank/credit union rate
7.5%
Bank term (years)
5
Bank fees
$200
Dealer price discount (if paying cash/external finance)
$2,000

Dealer finance costs $40,215 in all, including $4,715 of interest. The bank loan on the discounted price costs $38,864, including $5,664 of interest - $1,352 less despite the higher rate.

Questions people ask

Why do dealers push their finance?
Dealers earn significant commission (often $500-$2,000+) for arranging finance, so they're motivated to sell it. This doesn't mean it's bad - just that you should compare.
Are 0% or 1% dealer finance deals real?
Yes, but there's usually a catch. The car price may be inflated, or you may miss out on sales discounts. Compare the 'driveaway' price with and without the special finance.
Should I tell the dealer I have bank approval?
Yes. It gives you something to bargain with. Ask them to beat your rate or offer a cash price discount. Having alternatives makes you a stronger negotiator.

The terms, in plain English

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.

Official sources

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