Are Professional Car Buying Services Worth It?
If you don’t want the hassle of dealing with a car salesman, there are services that will do it for you.
But are car buying services worth the cost?
Well that depends on several factors. Let’s take a look.
Table of Contents
- How does a car buying service work?
- What are the different types of car buying services?
- What to Look for in a Car Broker / Concierge
- How much does it cost to use a car buying service?
- Is a Car Broker Worth It?
- Frequently Asked Questions
How does a car buying service work?
First, you identify the make and model car you want.
Second, the service will arrange a pre-negotiated deal on a new or used car for you.
Finally, you show up to the dealership with your deal terms, sign the paperwork, and drive off in your new car.
Some of the better car buying services will handle negotiating your trade-in and financing as well.
What are the different types of car buying services?
Professional car buying companies go by a variety of names like auto broker, auto concierge, or a car buying service. Regardless of what they call themselves, it’s easiest to think of them as two different types:
- Car buying websites and membership sites (self-service)
These are websites like Costco (read my review), USAA, and TrueCar (read my review) that offer pre-negotiated deals on cars. The websites are usually “self-service”. You choose a type of car and get a guaranteed car price (when dealers decide to honor it). These websites are able to pre-negotiate rates with dealers because they generate customer referrals in volume, but no one will be negotiating your specific deal.You can usually negotiate a much better deal than these services.
Dealers pay a commission to the car buying service for referring you.
- Car brokers and car buying concierges (full-service agents)
These are “full-service” agents that have a person who will act on your behalf and line up a car deal for you. They’ll find out exactly what you want and contact several car dealers to get you a competitive price.Performance varies greatly by broker, but the better ones will earn their fee many times over in the savings they bring you.
You’ll pay a commission to the car buying service, typically in advance. But some shadier car brokers double-dip and take a commission from the dealership as well.
What to Look for in a Car Broker / Concierge
- Look for brokers offering a flat rate fee and not a percentage of savings which can end up being a lot more money.
- Look for brokers that include extra services within their fee such as negotiating your trade-in and financing.
- Make sure the broker is working independently and is not getting kickbacks or commissions from car dealerships.Beware brokers that offer very low fees. If they do, they might be getting commissions from the dealership. And if that’s the case, they will likely settle for a preset car price and not work to get you the best possible deal.
- Look for brokers with extensive background in the automotive business or dealership experience.
- Make sure the broker is licensed to sell cars in your state.
- Look for positive reviews from other customers.
How much does it cost to use a car buying service?
What does a car buying website cost?
A car buying website like Costco, USAA, or TrueCar will charge a flat fee, usually around $300 to the dealership for each deal.
What does an auto broker charge?
A car broker will charge you, the buyer, anywhere from $250-$1500 to negotiate a deal. The average agent charges around $400 for negotiating car price only. Prices go up for brokers who also negotiate your trade-in and financing (which make a huge impact on the overall cost of your car).
Is a Car Broker Worth It?
If you find a good broker, then yes, they can save you a lot of time, hassle, and frustration.
I teach people how to negotiate great deals for themselves. But I’m well aware the negotiation process takes time, patience, and a willingness to play hardball with several car dealers at once.
It’s not for everybody.
If you are short on time or just want a professional to help you through the process, car brokers will usually pay for themselves in savings many times over.
Frequently Asked Questions
Do car buying services save money?
Yes, they all will save you money. But some will save you significantly more than others depending on the type of car buying service. See our pick for the best car buying service.
What does a car broker do?
A car broker acts as your agent to help you buy a new or used car (similar to a real estate agent). You tell them the make and model vehicle you want and they negotiate with car salesmen on your behalf. See our pick for the best car broker.
Do auto brokers negotiate your trade-in value?
Yes, some brokers will negotiate your trade-in as well as loan rates on your behalf. See our pick for the best car broker.
Do auto brokers negotiate both new and used cars?
Yes, some brokers will negotiate new and used cars as well as leasing rates. See our pick for the best car broker.
Is buying a car through Costco a good idea?
You can get a deal through the Costco Auto Program. They offer pre-negotiated discounts on cars from local dealerships. However, you can often negotiate a better deal yourself.
What is the difference between a car dealer and a broker?
A car dealer works as an employee of the dealership and is incentivized to sell you a car for the highest price possible. They get a commission that is tied to the sales price of a car. A car broker on the other hand is an independent agent that works on your behalf to help you negotiate the lowest price possible. They typically work for a flat fee paid by you. See our pick for the best car broker.
Do auto brokers need a license?
Requirements vary by state, but most require a broker to have a license issued by the state and a surety bond to protect you from fraud or misrepresentation. See our pick for the best car broker.