auto

Using an intermediary

You want to buy a car but you hate all the stuff that comes with the process -- the mind games, the haggling and the posturing. Not to worry, there are other ways to go about negotiating a great price on an automobile besides prostrating yourself.

One option for car shoppers is to pay an auto broker to do the haggling for you. Although this isn't really a new service, brokers are gaining popularity in some parts of the country. Here's how it works: You call the broker and provide the specifics on the car you're looking for and the price you want to pay. The broker then finds the car and orders it for you.

How is the broker paid?

Look for a broker that charges a flat fee for its service, such as 1 Click Auto Brokers or CarQ, and don't feel you have to use one in your geographic area. Many are Web-based and help clients virtually anywhere. Fees usually start at about $200 and go up to $1,000, depending on the car you're buying. Used cars usually carry a slightly higher fee because it takes more research and time to find the right vehicle.

Avoid those who call themselves brokers but in reality are agents of a dealership or may even work directly for a dealership. Some have a standing arrangement with several auto dealers through which they can get cars at a set percentage over the inventory cost in return for a certain volume of business. Once you pay the dealer, it then pays a commission fee to the broker for delivering the sale. There's nothing illegal about this in most states, but you need to be aware that these "brokers" are not necessarily working for your best interests.

If you consider working with a broker, ask for something in writing that explains how the broker is being compensated and by whom.

No dealers

Many dealers won't deal with brokers. The reason? Brokers say it's because they know how to get good deals for new-car buyers. It's like any big business that doesn't like small businesses that stop it from charging as much as it would like. It's the same reason dealers don't like publications such as the Kelley Blue Book or Edmunds Automobile Buying Guide that list vehicle prices. The dealers think that the customer shouldn't have any idea of what the car costs or how much profit they're making.

You should be aware that broker licensing and regulation varies from state to state, so be sure to check the broker's history before doing business.

While the number of brokers continues to grow, their impact on the industry is still minimal, accounting for fewer than 5 percent of all sales -- probably because most people like to see the car before they buy.

Going with an auto buying service, such as AAA or BJ's Wholesale Club, can make good sense if you know exactly what you want, are strapped for time, aren't very good at negotiating or just don't want the hassle. These services usually have an agreement with a dealer or dealers in the area and can get you discounts off the car's list price. You won't save an awful lot -- actually in most cases you can get the same or better deal by just going to the dealer and offering to buy the car for $500 to $1,000 off list price.

Several things you should first check into if you use a broker:
  • Is the broker licensed to sell cars in your state?
  • Is the fee flat or a percentage of the final price?
  • Is the broker being paid or compensated in any way by a dealer, manufacturer or dealer association?
  • Are previous customers happy or unsatisfied? Check for online forums or ask for testimonials.
  • What is their relationship with the dealers or manufacturers, and what experience do they have?

 

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