Secured Loan vs Dealership Finance for a New Car… which is easier to get?

Personal Finance Australia Forum
1

Hey everyone,

I’m in the process of buying a new car and am a bit worried about getting declined for finance. I’ve got no defaults, no unpaid debts, and a decent salary. My credit scores are mixed—Illion puts me in the low 500s (Good), while Experian has me nearly at 900 (Excellent). The lower Illion score seems to be from having a lot of credit inquiries, mostly from back in 2019 when I tried multiple times to get a credit line.

My main question is: is dealership finance generally easier to get than a secured loan from a third-party lender?

I’m a bit nervous about trading in my car for a better price with a different dealer, in case it affects my new car finance approval, even though the dealership has assured me there’s a 90% chance it’ll go through. They mentioned that I don’t have to pay off my current loan as a backup plan, but ideally, I’d like to pay it off to improve my credit score.

Current car value: $60k; remaining loan balance: $32k.

Thanks for any advice :pray:t3:

2

It depends on your overall financial situation. Generally, secured loans are cheaper than dealership financing. If you’re a business owner or sole trader, dealership finance might be better for tax purposes.

If not, a secured loan is probably the way to go. The high number of inquiries shouldn’t hurt your credit too much if you can explain the reason behind them. But if you were declined previously, it could mean your borrowing capacity is stretched. Since you mentioned you have a clear credit file, the 500 score is a bit puzzling. There might be something else affecting it.