22 Apr, 2022
How Do Car Broker Service Work?
AF By November 15, 2021
If you’ve ever wondered how exactly a car broker service works and whether or not car buying experts can actually save you time, money and stress when purchasing a new vehicle, you’re not alone.
While a large number of car broker services exist here in Australia, typically, the public is unaware of the role they play and how their services work.
The purpose of a car broker remains a simple, straightforward one: they exist to secure a new or used vehicle for a buyer at the best possible price. However, how they manage to secure these deals while making a profit themselves remains somewhat unknown to the public, which is exactly what we’re going to break down today.
With that in mind, let’s dive into the concept of how car broker services work here in Australia to determine whether or not you should use a service like this to save you time and money in the purchase of your next vehicle.
How Do Car Broker Services Operate?
Car broker services operate as an intermediary, or a ‘bridge’ between the prospective buyer of a vehicle and the dealership or fleet manager that is selling the vehicle in question. A car broker does the majority of the legwork in terms of finding vehicles, communicating with sellers, organising the red-tape necessary for the purchase and even helping to secure finance for the purchase of that vehicle.
In exchange for this work, the car broker service receives a small commission rate that can vary from a few hundred dollars to several thousands, depending on the value of the purchase, the length of the negotiations and the work necessary to secure the purchase with both parties involved.
What Service Does a Car Broker or Car Buying Expert Provide?
In much the same way that a real estate broker helps to identify potential properties of interest for buyers looking to get into the housing market, a car broker service operates to connect buyers with their dream vehicle. From this initial touch-point, depending on the service, the broker will be the intermediary that communicates with the car dealership or private seller, as well as the prospective buyers to secure the right vehicle at the best possible price.
Car broker services can also help you identify potential vehicles that might not have made your initial shortlist. The automotive market is swamped with options for every type of segment, whether it’s an off-road 4x4, a compact city hatchback, family-friendly SUV or a luxurious sedan, it can be difficult to separate the good cars from the great options on the market unless you have expert knowledge.
A car broker not only helps you whittle down your shortlist, they also do a significant amount of work in contacting dozens, sometimes even hundreds of different sellers around Australia in order to secure the best possible price for their client. A broker often has fleet purchasing power, due to the volume of sales they can help facilitate, which helps them secure better than retail prices for certain models, but this isn’t always the case.
In short, a car broker service offers the following:
Assistance with finding the perfect vehicle suited to your needs
Reducing the stress of the car buying process
Cutting through the marketing spin, finding fit-for-purpose vehicles
Frequent communication with the seller
Competitive fleet pricing during negotiations
Potential of bundled features, accessories and add-ons
Finalising warranty coverage
Organising insurance coverage for the vehicle
Taking care of delivery logistics
How do Car Brokers Make Money?
Like all the major segments of brokers such as mortgage, real estate and stock market brokers, the service itself makes money through successfully pairing buyers with their vehicle, and either taking a commission from this sale or adding a service fee to the final transaction. If you’re wondering how these brokering services are able to secure attractive prices on new vehicles while private buyers can’t, the answer lies in the power of fleet purchasing.
Car broker services are often linked to sizable wholesale sellers, and work with them on such a frequent basis that they’re significantly better positioned to negotiate on price than a private buyer. This often translates to thousands of dollars of savings per vehicle, which helps the broker service justify their service charges to the customer while still offering the customer a cheaper than retail price.
How Much Money Does a Car Broker Charge?
The amount of money a car broker service charges depends largely on the individual service. The final amount you might pay a broker at the end of purchasing a $30,000 vehicle, for example, might stand at anywhere between $500 - $1,000, however, if they’ve been able to save you more than $1,000 on the sticker price of that vehicle, you’re still in a better financial position than if you had purchase the vehicle yourself from a dealership.
The inherent savings of a car broker means that you’re still required to pay for their services, but if the broker is a professional outfit with the right connections, you stand to save far more than any service fees or commissions that are added to the purchase price.
Is using a Car Broker Worth it?
The question of whether or not using a car broker service or a car buying expert to help is worth it depends largely on just how much time you’re willing to invest while researching, communicating with sellers and negotiating prices for your next purchase. Even with a significant amount of time up your sleeve, you’re unlikely to get the same discount that brokers are able to secure, due to the power of fleet purchasing, and the close relationships with wholesalers that these brokers have.
As a result, it’s likely that using a car broker service will indeed save you money on the purchase of your next car, even when you’ve factored in that broker’s fees. Typically, a car broker won’t present you with a list of options unless they’re extremely competitive, so even with the fees included, the price of that new vehicle is likely to be less than you’d be able to secure as a private buyer.
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