You’ve heard of an insurance broker, a stock broker, but how about a car broker? Did you know that you could purchase a car in this way? Some might balk at the idea of purchasing a vehicle through a car broker. They don’t like the idea of a “middleman” because all it says to them is “I’m going to be paying more than I need to for this service.”
In today’s blog, I am exploring the world of the car broker, and in particular the many advantages that come with working alongside an auto broker. You might be surprised, so please read on.
What is a Car Broker?
A car broker, sometimes also called an auto broker, is an automotive professional often with a sales background who offers a service to car buyers where they source and negotiate car deals on a buyer’s behalf.
In the same way that stock brokers know stocks, and insurance brokers know insurance, car brokers know cars, and they know them really well.
In other words, if you’re looking to buy a car and you use this service, the broker will take your place in the searching and inquiring process, leaving you just to make the final decision on which deal you want to sign.
What Happens When You Work with a Car Broker?
Once you’ve found a reputable broker with good online reviews and a proven track record, you can get started. The first step might be to pay a small retainer to the broker, perhaps $100 or so, to get the ball rolling. Not every broker will demand the same, but it’s good to know that it’s normal practice. They will then need to know all your preferences and needs when it comes to a car. Be as detailed as possible.
After that, they will begin the process of searching for a car based on the things you have mentioned that you need. If you have offered a good level of detail, then the chances of them coming back with options that you will like is greater. If you are too vague – saying “just get me a blue car,” for example – then the process just becomes more drawn out and frustrating.
Once you have the car you want, you then get to the issue of payment. Some brokers take a flat fee, while others might charge a percentage based on purchase price vs. value. The rule of thumb tends to be that fees on used cars are higher than those on new ones, because finding specific used cars invariably means more work for them.
If they take a percentage, then it’s typically calculated according to the amount you pay vs. the Kelley Blue Book (KBB) value. If they’ve saved you $5,000 on the KBB value, then your payment to them is a percentage of that $5,000. This incentivizes the broker to work harder to bring prices down.
Benefits of Using a Car Broker
As I mentioned in the introduction, it feels counterintuitive to involve a middleman in a car-buying process. The gut feeling is that doing so may make things a little easier, but would end up costing a lot more money. In this section, I’ll be looking at the many real benefits of working with car brokers.
1. Financial Savings
Let’s start with the most counterintuitive benefit, and that’s the potential financial savings. Despite adding a middleman to your car buying process, you can actually end up saving more money when you use a broker.
The reason for this is that car brokers are invariably car sales professionals themselves. Many people who become brokers used to work at car dealerships. This means that they know all the tricks, the terminology, and more importantly is that they know how the dealership salespeople operate. Furthermore, brokers have more reach into the world of car financing and will have better insight into where to find car finance based on the car you want and your particular circumstances.
The deals that car brokers negotiate are nearly always the absolute best you can get. You might be a savvy negotiator in your life, but that doesn’t mean you can also specifically get the best possible deal on a car. A broker can do that, and your wallet will thank you.
2. Locating the Perfect Car
When you search for cars yourself, it can get rather tiresome and tedious. Most people when looking for cars tend to end up settling for something a bit less than what they really wanted. It might be the right model they wanted, but the wrong color or the wrong trim level. It might be the right price but not the right marque or model year.
It’s hard to get all the factors right. At least, for most of us it is. For an experienced and knowledgeable car broker, it’s a piece of cake. When you use a broker, therefore, you have a much better chance of getting exactly the car you wanted without compromising on any detail. Brokers are especially gifted at finding unusual, special-edition, or otherwise rare vehicles that you might want but no dealership can provide.
3. Frees Up Your Time
When you pursue every possible lead and connection until you finally find the perfect car that matches all your needs, you start to appreciate just how much less burden it is to work with a broker instead. The broker’s advantage is that they can call upon their impressive body of experience to quickly narrow down the places to look and places to avoid. Unlike you, a broker doesn’t have to explore every avenue, because they know in advance which ones to avoid.
You might think you’re up to the task and want to take it on yourself. If you have the time and energy, that’s fine, but as it turns out, a lot of people have neither of these two priceless commodities. Let the car experts do the searching while you continue with whatever you do. Even if you ended up spending more by using a broker, it’s a small premium to pay on a stress-free experience.
4. Less Stress (dealing with salespeople)
Besides giving you back your time and energy, there’s another way in which auto brokers make the car-buying process less stressful, and that’s dealing with the car salespeople. When dealing with an ordinary customer, there is an entire manual of sales patter and upselling tricks that dealerships and their sales staff try to employ to get you to spend more money. It’s understandable enough. The dealership is a business and they’re trying to make money.
For many, however, it turns what should be an exciting time of buying a new car into a stressful chore. Every phone call to dealership becomes worrisome because you’re scared of how the salesperson is going to react and how they’re going to use their tactical verbal wizardry to come back at you to explain why this perfectly reasonable thing that you want is actually a very bad idea.
Brokers handle all of this, making the process simpler, and leaving you just to make a final decision on which car you want before signing the paperwork and making payment. As many of the brokers are former car salespeople themselves, they know the score and can’t be fooled by any of the dealership patter.
5. Brokers Work for You (Or at Least They Should)
Finally, a car broker is someone who is in this process working for you. They don’t work for the dealership, and therefore it’s in their interest to get you the best-possible deal. Their reputation is staked upon getting you the car you want at the best-possible price.
There is a small danger here that buyers should be aware of, though. Be wary of any broker who says they’ll provide their service at little to no fee to you at all, or without any kind of financial incentive coming from you (like the retainer I mentioned before). This is typically a sign that the broker is actually working (even unofficially) for one of the dealerships in exchange for commissions or kickbacks.
If a broker is trying to push a particular brand or model on you, then be mindful of that. They are not salespeople; they are like agents and their only role is to get you what you want. If you find that they are suddenly selling to you, then consider it a red flag.
And so, there you have it. These are just some of the many advantages that come with working with a car broker. Perhaps next time you want to buy either a used or new car, you might consider allowing the expertise and industry experience of the broker be your ally in finding the best possible deal.