Quick answer: A low advertised rate can coexist with substantial introducer, origination, establishment and monthly fees. If those fees are financed, you also pay interest on them. Ask for every fee in dollars and reconcile the amount financed to the vehicle price and deposit.
Questions borrowers commonly ask
- The rate is 2%, so why are the introducer and application fees over $2,000?
- What is a dealer agency fee actually paying for?
- The salesman said about $1,000 in fees but the written quote is much higher — why?
Start with the amount financed
A borrower can believe they are financing $30,000 and discover the actual principal is $32,900 after fees. That difference attracts interest.
Common fee buckets
Quotes can include lender establishment, origination or introducer, dealer agency, PPSR, monthly administration, broker/customer and early-payout fees. Not every loan has every fee.
Ask who receives the fee
Moneysmart recommends understanding who is involved in arranging the loan. If a fee is capitalised, calculate both the fee and the interest paid on it.
General information only. Approval, pricing, fees, income treatment and vehicle eligibility depend on the lender, borrower circumstances and contract.
Frequently asked questions
Do I pay interest on financed fees?
Yes.
Can a dealer charge an introducer fee?
Finance arrangements can include dealer or introducer fees; check the written disclosure.
Can a broker charge too?
Some brokers charge customer fees.
Does comparison rate solve it?
It helps but still compare your actual dollar costs.
Should I reject any loan with fees?
No; compare the total cost against alternatives.
Sources and verification
Related GPS Finance resources
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