Compare before the showroom
Moneysmart puts the order plainly: look at loans before finding the car, and compare car loans from the borrower’s own bank with those from other banks and financial institutions, and from car dealerships when buying that way. It warns that people selling cars can use high pressure sales tactics, and that knowing how much can be spent, the best rate on offer and what the repayments will be helps in negotiating.
Its page on buying a car repeats the point for the moment of sale: dealerships may offer finance, and what they offer is worth comparing with other lenders, such as a bank.
The hands a dealer-arranged loan passes through
Moneysmart says a car loan conveniently arranged at the dealership can come with fine print showing fees paid to several people, and that a broker may be involved as well as the lender. Its suggestion is to ask who is involved, and what additional fees are included, before signing. The fees it lists line up along that chain:
- The lenderEstablishment feeCharged once by the lender to cover its costs of setting the loan up.
- A broker, if one is involvedBroker feeCharged once when a broker arranges the finance. Moneysmart says it must be disclosed on the finance contract.
- The dealershipDealer or introducer feeCharged once by whoever introduced the buyer to the lender, which can be the car dealership, for its help with the application.
- Over the life of the loanOther feesA monthly service fee, a default or missed payment fee, and extra “default” interest that may be charged.
What ASIC counted in 2026
ASIC’s review of eight car finance providers, published in June 2026, found that, across the sector, consumers are generally charged both a loan establishment fee and a distributor establishment fee. The second is the introducer fee: the lender charges it to the borrower under the loan contract and pays it to the dealer or broker that helped set the loan up.
- Lender establishment fee$299–$995range ASIC reported
- Distributor establishment fee$912–$2,500from a flat fee to the highest cap
Ranges from ASIC’s media release on the review. They describe the eight lenders reviewed, not the whole market, and they are not a quote for any loan.
ASIC also notes that these costs are often capitalised, that is, added to the amount borrowed, and that when loan amounts are low the fees often make up a substantial share of the loan. Moneysmart’s reminder is that a loan is repaid with interest on top of what is borrowed. In this guide’s reading, a fee added to the loan is therefore paid for with interest over the term; the fifth guide, on the comparison rate, works that through with round numbers.
The review looked at how dealers and brokers are paid as well. It describes volume-based commissions, tiered bonuses and performance-linked rewards, and says distributors can earn bigger fees for bringing in larger contract amounts, usually on a sliding scale. In ASIC’s words, “Some distribution models inherently give rise to conflicts of interest, such as dealerships benefiting from the sale of a car and distributor establishment fees along with commissions.”
Side by side
| Question | Finance arranged at the dealership | A loan arranged with a lender directly |
|---|---|---|
| Who is involved | The lender, and possibly a broker as well as the dealer. | The lender, plus a broker if one is used. |
| Establishment fees ASIC saw | A lender fee and a distributor fee, typically both. | Moneysmart lists application or establishment fees among the costs to look for on a personal loan. |
| If the car was misrepresented or faulty | Where the lender is a linked credit provider of the dealer, the dealer and lender can be jointly liable for the loss, within limits set by the National Credit Code. | The linked-credit rules turn on an arrangement between the seller and the lender, so the answer depends on whether one exists. |
| If the sale is cancelled | A tied loan can be ended too, under conditions in the Code. | The same section does not apply where the credit came from the borrower’s own approach that the seller or lender did not induce. |
| Insurance offered with it | Moneysmart says a dealer may try to “add on” insurance and that add-on insurance is usually poor value for money. | Moneysmart’s comparison list for personal loans covers rates, fees, loan use and term. |
The table compares how the sources describe each route. It does not say which is cheaper: that depends on the particular loans, which is why Moneysmart’s advice is to compare them.
The linked-credit rules, in plain words
The National Credit Code calls a lender a linked credit provider of a seller where, among other things, the two have an arrangement about providing credit to the seller’s customers, the seller regularly refers people to the lender for credit, the seller makes the lender’s application forms available, or the lender’s contracts or applications can be signed at the seller’s premises.
Where a buyer suffers loss from misrepresentation, breach of contract or failure of consideration in the sale, and the loan came from a linked credit provider, the seller and the lender are jointly and severally liable for it. The Code gives the lender defences, generally requires proceedings against both, and caps the lender’s share at the amount of credit plus any interest and costs a court awards.
ASIC counted six of its eight reviewed lenders as linked credit providers, because they lend through the dealerships selling the cars. It found that, when the review began, none of them had a policy on how to deal with these obligations in practice.
A loan with a promise attached
Some car loans offer a guaranteed future value: the car can be returned for a set value at the end of the term, with a choice to upgrade, keep or return it. Moneysmart notes that conditions apply to realise the full trade-in value, such as a limit on kilometres and returning the car in good condition. ASIC found these loans had shorter terms, between 12 and 48 months. In one case study it described dealer training modules that appeared designed to persuade buyers to accept these loans through high-pressure sales tactics; the lenders involved agreed to remove and review them. The balloon payments guide shows what the final lump sum does to the total.
Questions to settle before signing, from Moneysmart’s checklist
- Who is arranging the loan, and which extra fees come with it?
- What do all the fees that could be charged add up to?
- How do the comparison rates of several loans of the same type line up, and which works out cheapest?
- Could the repayments still be met if circumstances changed?
To confirm that a lender or broker holds an Australian credit licence, ASIC’s Professional Registers Search shows it.