What is an Auto Broker? Can They Save Me Money?

Unsure if you need an auto broker to help you purchase a car? We'll break down what they do, how they can save you money, and if it's the right decision for you.

Auto Broker

When was the last time you explored the automotive market for yourself? Has it been a number of years? How did you buy your last car? Perhaps you bought it from a friend, or a family member bought it for you.

It’s also possible that you just did what most people do and that’s visit your local dealership and get something that you can afford and hopefully like.

An alternative avenue for purchasing a car that not everyone thinks of is using an auto broker. Sure, you’ve heard of mortgage brokers, insurance brokers, and stock brokers, but what does an auto broker do? Is it true that an auto broker might actually save you money?

We’ll be taking a closer look at these essential questions and more in today’s blog.

What is an Auto Broker? What Do They Do?

The auto broker’s main job is to assist people in finding the best-possible deals on new cars that match their needs, their budget, and hopefully their wishlist in terms of car brand, engine power, features, and aesthetic style.

Imagine that you know you want or need a new car, but you either don’t really know where to look first, or you don’t have time to visit all the different channels through which you could find a new car. If you live in a large city, there are probably dozens of different car dealerships, and all of that is before we get to plethora of online listings. It’s a sea of information and deals that’s easy to get lost in.

An auto broker, then, helps you navigate all of this by doing the legwork for you. All you have to do is tell the broker what it is you want, and they will search local dealerships, online listings and their own extensive set of connections to find the best-possible result.

They’ll bring you things they think you’ll like based on the information you’ve given. If they’re right, then it’s great, but if it’s not, you can send the broker back out armed with additional information that we learned from this initial unsuccessful search. The job is only complete when you get the car you want.

How the Auto Broker Makes Money

You might be wondering: if the auto broker finds a car I want, and I buy that car, then how is the auto broker making any money? After all, the auto brokers themselves don’t supply the cars, so that money goes to whatever dealership or private seller they have found.

The brokers typically charge a flat fee for their service, which can come to anywhere from $400 to $1000 depending on your location and the size and prestige of the brokerage, and the level of service you purchase.

The fee is normally payable up front, or if not the fee then some kind of deposit. Only then will work commence. You might wonder how this could possibly benefit you financially if all you’re doing is adding anywhere from $400 to $1000 to the overall cost of your vehicle. Cars are expensive enough without adding these costs, aren’t they? If you think that, then you haven’t considered all the ways that the auto broker is helping you.

We’ll cover the many benefits of auto brokerage further below, but in short they can save you potentially thousands on sale prices, and what’s more they save you countless hours (and gasoline) driving from dealership to dealership, seller to seller, trying to find that perfect car. Besides the gas money, what else is all that freed up time worth to you? 

RELATED: How Do Car Dealers Make Money? (6 Ways)

How an Auto Broker Can Save You Money and Time

1.  Lower Purchase Prices

Let’s start by taking a look at the two key ways that an auto broker can save you money, firstly by securing a vehicle with a far better purchase price. Auto brokers are expert negotiators and know all the tricks of the trade when it comes to dealing both with dealerships and private sellers.

Their industry knowledge, together with a deep understanding of the local markets, allows them insight into how and where to find the car you want for the best-possible price, potentially saving you thousands of dollars.

The average consumer in 2022 is guided a lot more by convenience than by genuinely finding the right balance between price, quality and features in a car. The latter takes time and resources, something that most ordinary buyers are not willing to do.

Auto brokers can marshall their resources to complete the more balanced approach efficiently. In this way, as a buyer, you get to have your cake and eat it too, with a convenient process that delivers the best-possible car for you.

RELATED: 5 Reasons to Use a Car Broker to Buy Your Next Vehicle

2. Gasoline Spent Visiting Dealerships

The average household spends about $250 a month — that’s $3,000 a year — on gasoline. The average person isn’t driving all about the city from dealership to dealership, and from private seller to private seller, looking for the perfect car deal. Put those together and what you get is a big boost to your monthly and annual gasoline costs.

When you’re using an auto broker, you don’t have to worry about even a fraction of these trips. The brokerage will narrow selections down to small numbers of ideal matches. You can even veto these if they don’t look right and ask for different ones. This means you only ever make any trip to inspect a car or test drive a car when it’s very, very likely to be a match.

3. Saving Time and Energy

Besides money, it can’t be denied that not having to schlep around looking at cars is a huge saving in time and energy, as well as money. Not just that, the auto broker takes away all of the legwork which includes reading through reams of specifications and descriptions, and cycling through dozens of photos of cars you might like only to feel less sure at the end of it all which car you really want.

For most people, going it alone in the search for a new car without a broker leaves them with two choices: first to sacrifice time and energy from other areas of their daily lives to get the job done right, or second sacrificing the “best deal” part just to secure the most expedient one. An auto broker is a way to get the best balance.

Pros of Using Auto Brokers

To finish, let’s summarize today’s blog piece with the main pros and cons of using auto brokers. Hopefully it will allow you to see clearly whether or not an auto broker is the right choice for you.

1. Convenience

This is the primary benefit that most people seek. It almost doesn’t matter that it costs money since we are more willing than ever to pay premiums for things that deliver a seamless and efficient hassle-free experience.

Just look at the way more and more people are using instant car quote services to sell their cars to companies like Carvana and CarMax. They never get as much as they could by selling privately, but the convenience and speed of selling to these companies trumps anything else in their minds.

2. Financial Savings

Thanks to their superior knowledge of the industry, and their connections to numerous dealerships and sellers, brokers can really get you a net saving on the car-buying process. The car itself can be cheaper, and when you factor in the savings in gasoline and time that you have to spend looking at cars yourself, it turns into something quite significant overall.

3. Get Closer to the Ideal Car

Finally, auto brokers are very experienced and have helped many customers in the past. This means they are well attuned with your demands and are good at guessing what you’ll like based on the initial information you provide.

Even if they get it wrong the first time, they can come back and try again with more honed and refined information. Either way, the end result is that you get a vehicle that matches or very nearly matches every single one of your needs.

Cons of Using Auto Brokers

1. Additional Fee and No Guarantee of Big Savings

The brokerage fee is undoubtedly a downside to the process, even when it’s a flat fee that doesn’t incentivize them to push higher-priced cars at you.

The real downside is that you pay the fee in hopes that they’ll save you money on a car, but the fact is that no broker can truly guarantee that you won’t end up spending more through a brokerage process than you would if you bought the car yourself. That’s a risk you take and a premium you pay.

2. Improving Online Infrastructure

It’s undoubtedly a hassle to search cars out for yourself, but the online experience of car shopping is improving rapidly, and quite possibly to the point where auto brokers could become obsolete. Browsing inventory on your smartphone with perfect HD photos and video walkarounds, as well as getting test-drive information from YouTubers is all very easy. 

It’s still a lot to look at, but at least you can do it all from the sofa. Apps are getting smarter too, allowing you to simply filter out everything you don’t like, allowing the app to understand your preference and recommend other great deals — how’s that different from a broker? What’s more, they’re invariably free.