Car brokers in Australia
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Car brokers specialise in helping car buyers source and buy cars. They typically offer services such as finding a particular used car model to fit a budget, getting the lowest price on a new car, or negotiating with a used car seller on behalf of a client that already located the car by themselves.
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[edit] History
There have been car brokers operating in Australia almost as long as there have been car dealers. Car dealers recognised that some individuals stood out in their circle of friends or community as experts on car buying. The dealers started offering them a spotters fee each time they would bring a customer to the dealership. If the customer would buy the car, the broker (or spotter) would be paid.
After some time, a business model evolved where business would set up and call themselves motor brokers.
Motor brokers would typically be started by car sales people who wanted a change of lifestyle. They were almost exclusively one-person operations, and operated as de facto car dealers. They would be licensed as car dealers, and focus on maximising the profit margin on each sale.
As the popularity of the Internet increased, the first pure online car brokers appeared around 2003. These car brokers are typified by the lack of a dealer's license, and only dealing in new cars. This minimises the labour component of the business and allows a high level of automation.
In spite of car brokers having been in existence for decades, general public awareness of them in Australia is relatively limited.
[edit] Buying new cars
Car brokers work with their own established network of new car dealerships. When a client requires a new car, the car broker will contact one or more dealer in their network and determine which one will provide the specific car at the lowest price. Delivery and location parameters may also be considered. Most car brokers offer to deliver the car to the client's home or place of work. The transaction and Contract of Sale is almost always between the dealership and the client. Most car makes do not allow their cars to be sold to third parties for on selling to end users.
[edit] Buying used cars
Some car brokers can help source used cars as well as new ones. In many of these cases, the car broker will buy the car and then sell it to their client. Used car brokers are generally licensed. The reasons for having a dealers license are:
- The car may be bought at an auction where private sellers cannot bid.
- The car may be sourced from a private seller, but the buyer must purchase from a licensed dealer due to financing requirements.
- Clients often prefer buying from a licensed dealer as statutory warranties apply in most cases.
Many clients buy used cars via brokers without first seeing the car.
[edit] Other services
Other services provided by car brokers can include:
- Test drives. Using a car broker to arrange test drives removes the often stressful situation of having to go to a dealership and be subjected to a sales pitch while trying to evaluate a car.
- Financing. Typically, a finance broker will be aligned with the car broker to source discounted finance.
- Pre-approved finance.
- Extended warranties.
- Paint protection, rust protection, window tinting and other third party options and accessories.
- Car insurance.
[edit] Regulations
Car brokers are unregulated in Australia. The only state currently with any type of regulation is Western Australia, where dealerships are required to disclose the spotters fee to the car buyer. This applies to new cars only. The car buyer has to sign a document saying they are aware that a payment has been paid to a third party (i.e. the car broker) and the amount is specified.
Many car brokers disclose their spotters fee (also called dealer fee) on their websites. Some do not. Dealer fees over $1,000 are not uncommon - especially among those that do not disclose.
