Dealer commission on car finance in New Zealand
Yes, dealers can be paid when they arrange your finance. The Commerce Commission found in 2021 that dealers often get an introducer fee, and that most lenders it spoke to also paid an interest commission, where the dealer adds to the rate and is paid the difference. That does not make dealer finance wrong, but it does mean the rate you are offered may not be the lowest the lender would have given you, so ask.
The short answer
Dealers can be paid in more than one way when you finance a car through them. The Commerce Commission looked at this in its 2021 review of motor vehicle financing and add-ons. It described dealers as being compensated through fees, commissions or both for arranging finance and selling add-ons.
None of this is secret in the industry, and none of it is automatically unfair. A dealer who sets up your loan does real work. The point of this page is that you should know how the money moves, because it affects the price you pay.
The three ways a dealer can be paid
The Commission’s review describes these. The figures come from lender data for the 2020 financial year, so treat them as a guide and not a current price list.
1. Introducer fee
An introducer fee is paid for starting and helping with your finance application. The Commission said it is often charged to the consumer on top of any establishment fee charged by the lender. It is usually either a fixed amount or a percentage of the loan with a cap.
In the data the Commission collected, the highest introducer fee was $1,000, the lowest was under $5 and the weighted average was $276, based on eight of 15 lenders. That is a spread worth noticing. Two dealers can charge very differently for the same job.
2. Interest commission (also called flex commission)
This is the one that matters most for your rate. According to the review, most of the lenders it spoke to pay dealers an interest commission. The lender sets a base rate for you based on your risk. The dealer is allowed to add a percentage on top, and is paid that uplift or a share of it.
The Commission gave a simple example. A lender gives a base rate of 20% and lets the dealer add up to 6%. The dealer adds 5%, so the borrower pays 25% and the dealer is paid the extra 5%. In effect the dealer is helping set the rate you pay, within limits the lender sets. Most lenders told the Commission they cap the maximum rate dealers can charge.
The commission can be paid upfront, spread over the life of the loan, or at an agreed percentage. If you pay the loan out early, the lender may ask the dealer to hand back part of it.
The same review noted that this model has been banned overseas, by the Australian regulator from 2018 and by the UK Financial Conduct Authority from 2021, because it gave dealers and brokers a reason to push rates higher. We could not find a New Zealand law banning it as at November 2026. In October 2026 the Financial Markets Authority told lenders that commissions can create incentives that are not aligned with consumer interests, and that it will monitor motor vehicle lending for the next 12 months, focusing on how lenders manage conflicts from the way intermediaries are paid. Check the FMA if the current position matters to you.
3. Add-on commission
Dealers can also earn a commission by selling add-ons such as insurance products or repayment waivers, often by adding a mark-up to the wholesale price. This is separate from finance, but it ends up in your loan balance. Ask for the add-on price separately, and ask whether you can say no. Our page on mechanical breakdown insurance explains one common add-on.
So is dealer finance more expensive?
Sometimes. Sometimes not. A dealer who offers a lender’s base rate with a small introducer fee may be competitive. A dealer who adds the full permitted uplift and a large fee on a long term can cost you far more over the life of the loan.
Here is an illustration. The numbers are round and made up to show the effect, not real quotes.
| Base rate offer | Offer with dealer uplift | |
|---|---|---|
| Loan | $15,000 | $15,000 |
| Rate (illustrative) | 18% | 23% |
| Term | 4 years | 4 years |
| Monthly repayment (approx.) | $441 | $481 |
| Total repaid (approx.) | $21,150 | $23,080 |
On those assumptions, a five-point uplift costs about $40 a month and roughly $1,900 over the term, before any fees. Use the repayment calculator with your own figures to see what a different rate does.
What lenders have to do
The Credit Contracts and Consumer Finance Act (CCCFA) puts the main duties on the lender, even when a dealer handles the paperwork. According to Consumer Protection, lenders must explain the contract, check the loan is suitable and affordable for you, and check that any insurance sold with it is affordable and suitable. You should get a disclosure statement and an accurate written contract in plain language.
The Commission’s review also said lenders generally rely on dealers to walk consumers through the terms, and told lenders to make sure dealers do that properly. From 1 July 2026, the Financial Markets Authority took over as regulator of the CCCFA, according to the FMA’s page on changes to credit laws.
If the dealer’s finance is a hire purchase or secured loan, our glossary entry on dealer markup and the page on establishment fees give plain definitions.
What to ask before you sign
You are allowed to ask these questions. A dealer who answers clearly and in writing is a good sign. A dealer who avoids them is useful information too.
- Who is the lender, and what is the interest rate on my loan?
- Is that the lender’s base rate, or has anything been added to it?
- What are all the fees, and what does each one cover?
- Is there an introducer fee, and is it in the contract price or added to the loan?
- What is the total I will repay over the whole term?
- Are any add-ons included, and what does each cost on its own?
- Does the price on the contract match the cash price on the Consumer Information Notice on the car?
Consumer Protection warns about mismatches between the cash price and the contract price, and about “free” extras that are actually paid for through the loan.
Getting a second quote
The cleanest protection is a second quote on the same amount and term. You can get one from your own bank, from another lender, or from a referral service. The guide to dealer finance, brokers and banks lays out the trade-offs. Our page on car finance brokers covers how brokers, who may also earn commission, differ from referral services.
A pre-approved quote also puts you in a different position at the yard, because you are negotiating a car price and not a bundle of price, rate and fees at once. Our guide to car finance pre-approval explains what that means. Pre-approval is still subject to the lender’s final checks. Nobody can promise approval.
Where Fair Finance fits
Fair Finance is a referral service. It is not a lender, not a broker and not a financial adviser, and it does not give personalised advice. One application and one soft credit check go to a panel of approved New Zealand lenders. Fair Finance is paid by the lender only when a loan settles, and that payment never changes your rate.
That is a commercial relationship, and you are entitled to weigh it. Compare what you are offered with at least one other source before you decide. The quick check is where to start if you want to see options.
If you think you were overcharged
Start with the lender’s complaints process. Consumer Protection says unreasonable fees can be reported to the Commerce Commission (the FMA has regulated the CCCFA since 1 July 2026, so confirm where to send it), and a community law centre can tell you whether a fee is reasonable. If the lender does not resolve it, you can take the complaint to its financial dispute resolution scheme. Our page on making a car finance complaint walks through the steps.
If you are struggling with repayments, contact the lender early. Options can include a longer term, a payment holiday or interest-only payments. See struggling to pay your car loan.
When dealer finance is the right call
Dealer finance is not something to avoid on principle. It can suit you when the dealer’s quote beats your other offers, when you want the car and the loan sorted in one visit, or when a lender on the dealer’s panel will consider your situation and others will not. The Commission’s own review described agency arrangements like this as common in many sectors. The point is to treat the finance as a separate purchase.
Settle the car price first. Then ask for the finance terms in writing, and compare them with your second quote. If the dealer cannot beat it, you can use your own finance and pay the dealer the cash price. Taking a day to think costs you nothing, and a legitimate offer will still be there tomorrow.
Checklist
- Asked who the lender is and what rate applies to me
- Asked whether the dealer adds anything to the lender’s base rate
- Every fee listed, with what it covers
- Total repayment over the full term in writing
- Add-ons priced separately and optional ones declined if not wanted
- Contract price matches the Consumer Information Notice
- A second quote on the same amount and term
- Took the paperwork home before signing
General information only, not financial advice. Practices differ between dealers and lenders, and rules can change, so check the official pages below.
Sources
Common questions
Do car dealers get commission on finance in NZ?
Often, yes. The Commerce Commission's 2021 motor vehicle financing review said dealers are compensated for arranging finance through fees and commissions, including an introducer fee and, with most lenders it spoke to, an interest commission. Practices vary by lender and dealer, so ask the dealer directly how they are paid on your deal.
Is dealer finance more expensive in NZ?
It can be, but it is not always. If the dealer is paid by adding to the lender's base rate, a higher rate means more commission for them and more interest for you. The only way to know is to compare the dealer's offer, in writing, with at least one other quote on the same loan amount and term.
What is a dealer finance fee, and is it reasonable?
It is a charge for setting up the loan, and it is separate from the interest rate. Consumer Protection says fees must be reasonable and linked to real costs, and it suggests asking the dealer what the fee covers. If a fee still looks unreasonable, its page says you can report the finance company to the Commerce Commission. The Financial Markets Authority took over regulating the CCCFA on 1 July 2026, so check which agency takes reports.
Can I walk away if I do not like the finance terms?
Yes, before you sign. After you sign, Consumer Protection says you can cancel the credit contract by telling the lender within five working days of receiving the disclosure, but you may still have to pay the cash price within 15 working days. Do not sign until the numbers match what you were told.
Does Fair Finance get paid commission too?
Fair Finance is a referral service. It is paid by the lender only if a loan settles, and that payment never changes your rate. It is not a broker or a lender and gives no personal financial advice, so compare any offer you receive, including ours, with other options.
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