Is it a good idea to use a broker when buying a new car?

James Foxall
Written by: James Foxall
Posted on: 17 September 2015

You know exactly which make, model and colour of new car you want to buy. Now comes the thorny issue of doing the deal and trying to get the best price possible.

For many car buyers, haggling is something other people always seem to do better. So why not let someone else do it for you while you still benefit from it?

A car broker will do just that but there are some things to be mindful of. For starters, there are a lot of companies claiming to be brokers but many are simply online dealerships selling cars for knock-down prices. Others will put your requirements to a variety of dealerships and buy from the cheapest - which doesn’t necessarily guarantee a trouble-free experience.

You should also steer clear of any broker demanding an upfront payment for their services. Legitimate brokers are paid by whoever they source the car from. Jonathan Lawless, sales director at Carfile, a car brokerage that has been going for 25 years, said: "Proper car brokers operate by finding cars for their clients, doing the deal, then introducing their customer to the dealership. We earn our money by charging dealerships one per cent on every car we sell."

"Brokers can frequently secure the kind of price cuts most of us can only dream of"

But car brokers are a lot more than smooth-talkers who buyers pay simply to talk to car dealers on their behalf. Obviously they do that, but their job is to secure the customer a discount too. And because they know what they’re about, and have fingers in multiple pies, brokers can frequently secure the kind of price cuts most of us can only dream of.

In addition, brokers have an intimate knowledge of how dealerships work which enables them to haggle hard with dealers. Sam Shah from UK New Cars explained: "The money you can get off a car is generally made up of two elements: the manufacturer’s contribution and the dealer’s margin. We had a customer recently who was buying a BMW 335i. The manufacturer was offering every customer £4,000 off, the customer had negotiated a further discount of £1,000 with the sales executive and thought he was getting a great deal. We managed to push that dealer discount up to nearly £6,000 so the customer was getting close to £10,000 off the car."

It might all sound like a bit of a one-way street but brokers don’t just exist to help car buyers; the thing that enables them to do this is that they’re important to dealerships too. Using Audi as an example, sales executives will use brokers to move slow-selling niche models such as the A7. In return, brokers can negotiate discounts on more popular models such as the A1 and Q3 that regular customers would struggle to get because demand already outstrips supply.

For peace of mind, when choosing a broker, it’s worth finding out exactly what you’re going to get. Some brokers, for example, will achieve discounts by selling customers cars that have already been registered by a dealer. Dealerships commonly self-register cars as a way of hitting targets set by the motor manufacturer. Although these are brand new cars with barely any miles under their wheels, the buyer will be the second name on the registration document which in a few years’ time will have an impact on the car’s used value.

Finally, remember that a broker is simply a middleman. Sam Shah said: "Never give a broker any money. They are not buying the car for you; they are doing the deal. You pay the dealership."

Take note of these simple tips and you should be able to enjoy the benefits of the car broker’s expertise.

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