Car Leasing Broker Vs Dealer

• Should I lease a car through a dealership or a broker?
• How to tell if a broker is regulated
• Is it cheaper to lease through a broker or a dealer?

Choosing between a car lease broker or dealer is the first choice you should make before leasing a car. A car lease broker will have access to a variety of models and funders, which usually means cheaper deals. However, a dealer has the advantage of having a forecourt where you can test drive. But which is better for finding a great car lease deal?

Find out whether dealership or broker leasing is right for you in this handy guide.

Should I lease a car through a dealership or a broker?

There are numerous factors which dictate whether a broker or dealer is the best outfit to lease from. This includes:

• Whether you know which brand of car you want.
• If you want all the paperwork completed online for you.
• Your preference of test driving the car before purchase.

To help you out, we’ve summarised all that information for you in the sections below so you don’t need to do any needless searching around.

Lease broker

A lease broker acts as a ‘middleman’ between you, the dealership and the funder. It’s their job to try and secure you the funding you need for the vehicle you want. Since they work independently from manufacturers, they aren’t tied to any one funder meaning they have a wider network to work from and can secure better deals more often.

However, there are advantages and disadvantages to using a lease broker.

4 advantages of using a lease broker

There are a number of reasons why you might want to choose a lease broker for your next lease. We’ve highlighted the key ones below:

1. As an independent entity, lease brokers aren’t tied to a manufacturer. This therefore means they can offer deals on a range of vehicles, rather than just specific makes and models.
2. Equally, being independent means they can work with a wider range of funders which provides access to more competitive rates, as funders are in competition with each other. This means you’re more likely to get the best deal possible.
3. Since brokers depend on income from successful referrals, they will do all the hard work for you and try everything possible to get you what you need.
4. Due to their wider network reach, brokers can occasionally secure funding even if you have bad credit*.

3 disadvantages of using a lease broker

However, there’s always a flip side to every coin and as such, there are also some disadvantages to using a lease broker that you may wish to consider. The key ones are:

1. Depending on the broker, they may charge admin fees or other hidden extra costs. Make sure you are aware of what you’re getting into before giving them the go ahead so you don’t get hit by any nasty surprises.
2. While a broker may be independent, they may have one or two funders that they rely on or have commission bonuses with. As a result, they may not always have your best interests at heart.
3. When you choose to use a leasing broker, you won’t be able to test drive the vehicle or even leave with it on the same day. This is because brokers don’t deal with stock* and rely on factory orders. This means you will need to factor in a delivery period before you can get access to your vehicle.

Lease dealer

In contrast, a lease dealer is a direct source of cars which are tied to a certain manufacturer, with specific premises where all stock is held. You can go there, see the car you want to lease and test drive it before deciding on whether or not it’s right for you.

4 advantages of using a lease dealer

Just like there are advantages to lease brokers, there are also advantages to lease dealers, these are:

1. Leasing through a dealership provides the traditional experience we all know and trust: you visit a forecourt, find a car you like the look of, give it a spin and drive off the same day. This is great if that’s how you like to do things or can’t afford to wait for delivery and need something urgently.
2. Dealerships also allow you to speak to sales staff face-to-face. This means you can ask any questions you may have about the vehicle itself to the people most likely to know the answers, rather than researching everything yourself online.
3. They’re perfect if you already know what you’re looking for and dealerships can sometimes rival broker prices by utilising their own finance arm such as Volkswagen Local Business Leasing for example.
4. When leasing through a dealership, you’ll probably avoid any admin or hidden fees. This is because you’ll sit and go through paperwork with a member of staff there and then, compared to a broker that will handle all this for you when you lease with them.

4 disadvantages of using a lease dealer

Lease dealers also have their own unique set of disadvantages, the main ones being:

1. Leasing through a manufacturer means that you’re limited to the makes/models they offer. This means it would not be possible to lease a Tesla from a BMW dealership, for example. As such, you’ll have no way to compare a dealer’s stock to other similar vehicles to make an informed decision and sales staff will only be knowledgeable in the vehicles they’re selling.
2. Similarly, you’re limited to only the funder that serves that manufacturer. While they can sometimes match or better broker prices, it can just as equally be less competitive meaning you might end up worse off.
3. Dealerships are also likely to be more biased in the advice they give. A forecourt salesperson may be focussing more on their commission cheque and securing the sale than providing the best advice. This could ultimately lead to you choosing a vehicle you’re not entirely happy with, or spending time double checking the legitimacy of everything that was said.
4. They’re not suitable for people who have bad credit as lease dealers won’t lease to you unless you have a solid credit rating.

How to tell if a broker is regulated

Unfortunately, unlike dealerships, there can be ‘bedroom brokers’ that give the industry a bad name. These shady types work from home and generate an income through commission earned by referring business to larger brokers.

The good thing is these brokers are easy to spot, since they won’t be regulated. You can easily check whether a broker is regulated by looking for FCA or BVRLA regulation reference numbers on their website and cross-referencing these numbers with directories for the FCA or BVRLA. If you can’t find this information on their website, ask them for it directly. Should they fail to provide you with this information, it’s probably because they aren’t registered.

Another requirement the FCA and BVRLA enforce, is the need to have a dedicated business premises. Since these dealers work from home, a quick search on their advertised address can give you a better indication if they’re working from an office or from home.

If you have any doubts with who you’re dealing with, it’s probably safer to walk away than risk the consequences.

Is it cheaper to lease through a broker or a dealer?

Whether a lease deal is cheaper from a dealership or broker mostly depends on shopping around to find the best prices and having a clear idea of what you’re after.

If you are certain you only want to buy from a specific manufacturer or just want a newer model of your current vehicle, then it can be cheaper to go straight to the manufacturer’s dealership. They will use their own finance arm in order to offer great discounts to compete with brokers, e.g. Ford Credit or Honda Financial Services, and also provide you with a wealth of advice in regards to features and trims.

Brokers on the other hand have a great choice of models and funders, each of which will be competing with the rest in order to win your business. This means you’ll get lots of special offers across the year, that change often so you always have great monthly prices available for a wide range of vehicles. This is perfect if you’re not quite sure on what you want or when you want it. But bear in mind, that brokers can often charge admin fees that vary from dealer to dealer but can be around £200 + VAT per deal, however, a lot of the time these fees won’t outweigh the monthly cost.

If you have more leasing questions, then head over to our handy guides page for more answers to our FAQs.