What does a car broker do?

The process of buying a car can be absolutely thrilling for some, but it can be a lengthy process that buyers may not have the time or willingness to go through on their own. These kinds of buyers may instead wish to utilize the services of a car broker. A car broker, similar to a broker in other industries, acts as an intermediary between buyers and sellers to help streamline the buying process.

What services do car brokers offer?

Buying a car through a broker is typically designed to save you some of the legwork of buying a car. Car brokers often have an extensive personal network of car sellers — generally dealerships, but sometimes private sellers as well. Some car brokers may even be former car dealers themselves. They can potentially use this insider knowledge and network to help you find a good deal.

When you first consult with a car broker, they’ll typically ask you to give them as much information as you can on what kinds of cars you’re looking for, what features matter to you, what you can afford and more. Once they have an idea of what to search for, they’ll start combing through their network to find a match. As soon as they’ve found a potentially suitable option that you approve of, your broker may also be able to assist with negotiating the price and possibly even filling out the paperwork.

Types of car brokers

The term “car broker” is a bit of a catch-all. There are three types of auto brokering services out there:

Car brokers

Car brokers are often former dealers who have shifted to working more directly with buyers. They may work exclusively for the buyer, the dealership or a combination of the two. Due to this, there may be instances in which brokers have a financial affiliation with certain sellers and may receive a commission on sales.

Car broker vs. dealer:

If you’re wondering what the difference between a broker and a dealer is, it may help to compare it to buying a house. As a buyer, there are opportunities to work directly with the seller (who would be the dealer in this example), or you may choose to work with a real estate agent (the broker) who works on your behalf to navigate the home buying process for a fee. This is essentially the role of the broker — they're focused on finding options to help you make your decision; they’re not actually selling you the house itself.

Car buying services

Certain consumer clubs and financial institutions may offer car-buying services for a fee. These services may sometimes have pre-arranged pricing set up with local dealers. Car buying services offer consumers a way to cut down the time and effort required to find a car at a comparatively lower cost than a broker.

Car-buying concierges

Car-buying concierges are a lot like brokers, but they typically reserve their services for buyers only. This means they’re unlikely to have any potential conflicts of interest that a car broker receiving commissions from a dealer might have. Concierges also typically offer a higher degree of service, making themselves available for more hands-on consultation and even potentially helping with things like delivery and trade-ins.

How much do car brokers charge?

A car broker’s services can typically cost a few hundred dollars or more. When you factor in the time and effort saved shopping and negotiating, as well as any potential negotiated discounts, this cost may be an investment to consider.

When pricing out an auto broker’s services, it’s also helpful to inquire about how they assess their fees. Fee structures for brokers can be hourly, flat fee, or commission based on the value of the vehicle. An hourly fee or a value-based commission may indicate how the broker’s incentives align, or misalign, with your own. So, it may be helpful to look for car brokers offering flat fees instead.

Considerations when looking for a car broker

When trying to find a reliable car broker, there are a few things to look out for:

• Licensing: Brokers are typically required to have some kind of official licensing or other documentation that allows them to legally operate in that area. Exact regulations may vary in your state.
• Fees: As discussed above, fee structures typically come in one of three forms. Flat-rate fees are generally considered preferable for buyers.
• Affiliations: It’s helpful to inquire with your car broker if they’re affiliated with any particular seller or dealership and make note of any commissions they might receive from these relationships.
• Background: You can also inquire about the broker’s general background, how they got into this line of work and whether they have any prior knowledge of this industry.
• Word-of-mouth: Word-of-mouth advertising is powerful, because people tend to trust the recommendations of friends and family. Has this broker ever worked with someone you know? What was their experience? Are there any other client ratings or testimonials available that might help you?

In summary

Car brokers use their network of industry connections to find deals on your behalf. This is a convenience that some buyers may find worth the cost of broker’s fees. If you’re looking for a broker, it may help to inquire about things like their fee structure, reputation and whether they have financial ties to specific dealerships. For some people, part of the thrill of buying a car is doing all the research, comparisons, shopping and negotiating themselves. For those who enjoy getting the car, but not necessarily shopping for it, hiring a car broker may be something to investigate.