Auto broker vs. car dealer: What’s the difference?

Quick insights

• Auto brokers help you find and buy a car, almost like a personal shopper.
• Car dealers sell or lease cars directly to individuals and offer services like financing, warranties and trade-ins.
• Brokers usually charge fees for their services, but there are also fees associated with buying cars from dealers.

You can head to a car dealer and treat yourself to the thrill of a new car, or you could have someone basically do it for you. Although the reps at a car dealer help you buy a car, brokers do so to a larger extent.

Read on to learn more about the difference between car dealers and auto brokers—prominent parts of the auto world.

What is a car dealer?

A car dealer, or dealership, is a business that sells new and used cars. Franchise dealerships have special agreements or affiliations with specific automakers to sell their cars. Independent dealers carry vehicles from a variety of automakers.

Car dealers vary in size and specialization. Because they are not limited to new car sales, most dealerships offer both new and used cars for sale (or lease), and plenty of dealers even specialize in selling used cars exclusively. When selling a new or used car, dealers usually accept trade-ins, which helps them build their inventory for future sales.

What is an auto broker?

An auto broker is an automotive professional who helps individuals buy or lease a car. It may help to think of auto brokers as car-buying concierges. They offer a service that can help with most of the car-buying process. Brokers may have direct access to a range of inventory, but most of their work is in locating vehicles based on type.

When you want to buy a car, the broker could help you shop inventory beyond your locale, negotiate pricing or lease terms and even identify your financing options. In some cases, brokers may be former car dealers and leverage their knowledge or colleagues in the auto market to assist car buyers.

Understanding the difference between an auto broker vs. car dealer

The main way to make a distinction between auto brokers from car dealers is in the role each serves when you buy a car. Dealers are car sellers, while brokers are more like agents. You buy a car from a dealer, while a broker will help you buy a car.

Here are specific ways of distinguishing auto brokers from car dealers:

Ownership of vehicles

Brokers don’t own the vehicles they locate for buyers. Dealers do own most vehicles they sell by acquiring them through trade-ins, independent purchases or purchases from affiliated automakers. Because dealer’s own vehicles, they manage inventory and help buyers with lease or financing options.

Inventory

Given that brokers can locate vehicles for you from a wide ranges of dealers, even those in other states, brokers can offer a wider range of inventory. This access isn’t without drawbacks, including potential transport costs and long wait times. A reason most people use auto dealers is their readily-available inventory and the potential to drive off the lot the same day.

Although access to inventory differs, auto brokers and dealers can help buyers find what they want. If you don’t find what you’re looking for right away, dealers and brokers can both locate additional options. You might wait longer to get your dream car, but that wait is often worthwhile.

Pricing and fees

Auto brokers usually charge a flat fee for their services. This might seem like just one more cost associated with buying a car, whether from a dealer or through a broker. There’s also sales tax, registration an optional service contracts you might purchase, the list goes on. But in the end, the service provided by your broker—locating your new car and negotiating the details—might be worth it.

Customer relationships

You can expect a degree of one-on-one service from both auto brokers and car dealers. Broker services are not automated—you usually discuss your wants and your budget with an actual person at some point. Traditionally, auto brokers will stay in contact with you throughout the car-buying process.

Dealers have representatives who can help you browse, test and decide on a car that’s right for you. Expertise can vary among dealer representatives and auto brokers. In general, dealers have knowledge of a single automaker, while brokers may have broader expertise.

Are auto brokers worth it?

Factors that might help you decide to use a broker include their fees, reputation and affiliations. Auto brokers usually offer a comprehensive service. Before you work with one, you might be able to learn how they operate, what they charge and how they’ve been reviewed online. You may also have to meet with several brokers to determine these details.

One additional consideration is how much you enjoy shopping for a car. Some people find the process exciting—from researching and comparing to negotiating their own price. If the process doesn’t appeal to you, hiring an auto broker may be worth what you pay for their assistance.

In summary

Auto brokers are intermediaries between car buyers and sellers, mainly helping the buyer find their desired vehicle. This service usually costs money and might be a flat fee or an amount based on the cost of the car. Car dealers, on the other hand, sell vehicles directly to buyers from their inventory and usually offer lease, finance and trade-in options. Your car-buying experience with an auto broker or a dealer might depend mostly on your goals, the extent of the professional’s expertise and their access to inventory.