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What’s the Difference Between a Car Dealer and an Auto Broker?

The differences between a car dealer and an auto broker are tremendous.

What a Car Dealer Does

In one aspect, the two are similar. Each must be licensed by the state that they are operating in. Other than being required to have a license, they are as different as night and day. A car dealer may fall into several licensing categories depending on what type of business they are doing. For example a used car dealer must have a different license than a new car dealer or a salvage title dealer. A car dealer may purchase vehicles from a wholesaler and at auction. A car dealer also has the ability to arrange financing for you.

What an Auto Broker Does

An auto broker can only negotiate a deal for a consumer. They will do all of the negotiating for a buyer and will mediate any differences that may occur during the buying process. An auto broker will do this for a fee in addition to the purchase price of the vehicle. Auto brokers may have developed connections within their area of operation based on the volume of sales they are able to generate. Their sales volume may allow them to negotiate a lower price than you could individually, justifying their fee. After the deal has been negotiated you will need to go to the dealership to sign any paperwork. The dealership may still arrange financing for you; however, you must typically pay any fee the broker requires in cash, it cannot be part of the financing process.

The Best of Both Worlds

Here at Motive Auto Finance, we can connect with a local lending specialist to lead you through the process of securing a loan for your vehicle. This specialist can serve as your guide and advocate, without charging you a cash-fee that an auto broker would. They may work for a certain dealer, but they can still help you to secure the lowest interest rate possible–a hugely important aspect of any vehicle purchase. This takes much of the struggle out of buying a car–much the same as an auto broker does–but won’t cost you a dime directly. Go here to submit your application for approval.