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What is a car broker?

A car broker is a person or service who buys cars for their clients. Like a mortgage broker, a car broker acts as the middle man between the vendor and the buyer.

Brands such are professional negotiatiors, and can secure bulk-buy or fleet discounts. You might only buy a car once every three, five, or 10 years, but car brokers do it everyday so they know the tricks of the trade. They can also save you the hassle of having to walk into a dealership like a lamb to the slaughter - they do the whole negotiation process for you.

Similarly, it could also help to think of a car broker as the big man (or woman) on campus. They often don’t just deal with car dealerships, not at all. They often have their inner friendship circle of financiers, insurers, wholesale dealers and more. So, they could be your oracle for the whole car buying process.

When do I enlist a car broker?

In Australia, you typically enlist a car broker when you've got at least some idea of the car you want. A Hyundai Santa Fe in white? Got it.

Your broker then liaises with their rounds of dealers to find and negotiate a good price on the car. Some brokers may offer car-finding services as an extra feature, as well as:

  • Organising test drives
  • Financing options (they could have a preferred finance provider)
  • Insurance (again, they may do deals with particular insurers)
  • Salary packing services
  • Trade-in quotes and services
  • Delivery to your door

This makes it possible to buy a car without ever really having to leave your front door - except to thrash the car around the block on your test drive. So if you’re fresh to the car buying service, a car broker may be able to help you out, but typically a car broker’s core business is to engage with the dealership.

Do car brokers charge a fee?

While in many cases there is no direct fee, you may find there is a built-in fee to the price you pay on the car. As a broker has direct relationships with dealers, they typically charge the dealership a commission, which then passes on that cost to you. A typical cost could be anywhere from around $150, all the way to around $1,000 or more if it’s an expensive car.

What about trade-ins?

Like negotiating for your new ride, the broker can also put feelers out among their dealership or wholesale buddies and obtain an offer on your trade-in vehicle. Usually there are limits with this, such as maximum age or mileage of the vehicle. Separating the trade-in from the new car purchase could also be used as a tactic so the dealership can’t use it as leverage by offering you a lower rate on the trade-in.

Will a car broker get me a good price?

A car broker usually has relationships with multiple dealerships, and is essentially a professional negotiator. Being that they negotiate on so many cars, dealerships may pass on cheaper prices to the broker.

This could result in a cheaper car with thousands of dollars reduced off the sticker price compared to if you tried to bargain a dealer down yourself. As mentioned, the broker's cut may be built into the purchase price. This cut can vary from broker to broker.

There are also other things your broker may be able to secure - other than price - that sweetens the deal. These sweeteners could include:

  • A paint upgrade
  • Floor/boot mats
  • Window tinting
  • Paint protection
  • Extended warranty

…and numerous other bonuses. This could be more likely to happen at the budget end of the spectrum, where dealers might not necessarily move on price, but can throw in extras.

What happens next?

If you’ve secured the services of a broker and you’ve found the car you want at a price you’re happy to pay, your next steps might be to organise insurance and/or finance the vehicle if you don’t have the cash upfront. You will need to organise these yourself if you don’t go for the broker’s or dealership’s options.

  • Insurance is usually just a case of getting a quote either online or over the phone and going from there, with the policy starting on the day you drive the car off the lot, in case you careen into a telephone pole.

Financing the vehicle is usually a case of choosing either an unsecured (personal) or secured loan. An unsecured loan usually attracts a higher interest rate, but the car isn’t used as collateral - with a secured loan it’s the opposite. You may also be able to get pre-approved for a loan amount, so you’re not walking around blindly with Ferrari tastes on a Toyota budget.

There are some key points to keep in mind:

  • The service isn’t exactly ‘free’ - the broker charges commission to the dealer, which is often passed on to the sale price.
  • Brokers don’t eliminate the whole process - often you’ll still have to have at least some knowledge of the car you want before enlisting their help.

Brokers can simplify the car buying process; they are essentially professional negotiators, and could be a convenience worth paying for.