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February 07, 2022

Do car brokers earn their keep?

Looking to buy a car? If you’ve ever felt intimidated by a smooth car salesman, or bewildered by all the dealer financing options, it may be time to enlist the help of a car broker in your search.

Admitting that she couldn't spend time shopping around and didn't want to feel vulnerable when negotiating at a disadvantage, that's the choice one friend of mine made recently.

And, overall, things worked out as planned.

Some brokers act solely as a referral service, putting you in touch with the dealer who offers the lowest price. In return, they’ll receive either a commission from the dealer or a flat fee from you.

Others will find the car you want at a franchised dealer, formally take title to the car, and then sell it to you with a mark up.

In addition to saving you the hassle of going from dealership to dealership, brokers who know the business say they may be able to do $2,000 to $3,000 better than you would on your own – even in today's economy. That may be a tad optimistic but there do seem to be savings available.

Unlike real estate agents, most car brokers’ fixed, no-haggle-fee structure enables you to pay based on the service, not a percentage of the car's ultimate sale price. And that’s what our strapped for time shopper did.

Fees at Automall Network, for instance, are $399 to find a new car or $799 to locate a gently used one, including inspection. Toronto-based CarSmart charges a flat $500 for its work although it concentrates on new cars only.

Iyou're unsure about commercial outlets, get in touch with non-profit consumer groups like Car Help Canada and the Automobile Protection Association, which will also negotiate on your behalf. With them, you’re only looking at an annual membership fee of less than $100.

Have you ever used an intermediary to buy a car? Did it work out? Were the savings all they were cracked up to be?

By Gordon Powers, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...