Auto Broker vs. Auto Dealer: What's the Difference?

Auto brokers and car dealers can buy used cars at wholesale prices, but the similarities end there.

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Auto brokers and car dealers serve two different types of customers. If you’re shopping for a used vehicle, here’s a breakdown to help determine which service best suits your car shopping needs.

Auto Brokers Serve Those Who Hate Car Shopping or Don't Have Time

An auto broker is a great fit for those of us who would rather go to the dentist than shop for a used car. Auto brokers are a great option for people who are without the time, and maybe businesses looking for work cars for employees who travel in the scope of their employment amongst others. Instead of wheeling and dealing at a car dealership for hours on end, an auto broker will instead buy the car for you for a fee.

However, it's not always easy to find the perfect used car. The chip shortage severely reduced the number of vehicles available to individual brokers, which is why car dealers (with more extensive inventories) may be a better route to go.

Car Dealers Buy the Car First and Then Advertise It for Sale

A car dealer buys the vehicle and then waits for a customer to buy it. They have to carry many vehicles on their lot, then have to advertise those vehicles to offer plenty of good choices to a wide variety of car shoppers.

Auto Brokers Focus on a Customer's Specific Needs First Then Buy the Car

Auto brokers work the opposite way. They take on the customer first and then look to see if they can find one specific vehicle in the marketplace that best fits their client's needs.

The process usually begins at wholesale dealer auctions, which sell thousands of used cars weekly. An auto broker will go online, find that vehicle, and provide you with a lot of information. This can include condition reports, CarFax histories, and dozens of images. They can then arrange a post-sale inspection and deliver that car to your door. These services typically add about $1,500 to $2,000 to the total spend, in the form of inspection and delivery fees.

Car Dealers Can Spend More Time and Money on That Vehicle Before You Buy It

One of the advantages of a used-car dealer is that you can test drive vehicles right off their lot. An auto broker can't let you inspect or drive the car in person (or take care of any aesthetic or mechanical issues) until you agree to buy it. This scenario is one of the many reasons car dealers remain so popular.

Once a car is purchased by a car dealer, they can immediately invest their time and money in repairing and cleaning up that specific car before offering it for sale. Auto brokers must take care of these issues after you agree to buy the vehicle.

When There are Too Many Unsold Cars Out There, Auto Brokers Can Get You a Deal

When the supply of cars outnumbers the buyers, an auto broker can pick and choose from plenty of good vehicles. Unfortunately, this isn't happening in today's market due to the chip shortage. Car dealers have too few vehicles on their lots. Subsequently, auto brokers have fewer vehicles to choose from. Some in-demand used models may not be available at all.

If you want a popular used car, chances are a car dealer will usually be the best source. But if you're looking for a rare or unpopular vehicle, an auto broker could be the better bet to find you a great car at a healthy discount over retail.

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Steven Lang
Steven Lang is a special contributor to Capital One with nearly two decades of experience as an auto auctioneer, car dealer, and part owner of an auto auction. Some of the best-known auto publications turn to him for his expert insight. He is also the co-developer of the Long-Term Quality Index, a survey of vehicle reliability featuring over two million vehicles that have been inspected by professional mechanics.