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April 1, 2020
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.
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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.
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:
Dealers pay a commission to the car buying service for referring 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.
A car buying website like Costco, USAA, or TrueCar will charge a flat fee, usually around $300 to the dealership for each deal.
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).
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.
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.
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Posted in Car Buying Tips |