What is an Auto Broker and how do you become one?

Auto Brokers are professionals who act as an intermediary between car buyers and dealerships to help buyers find the specific make and model they want to purchase.

Auto Brokers can access a wide range of new and used vehicles through their dealer networks. They often negotiate better prices, trade-in values, and financing terms than consumers could negotiate on their own.

Licensed Auto Brokers can sell vehicles to buyers in any state, online, or in person at their office. Other states may differ; visit their DMV licensing website for more details.

What is the difference between an Auto Dealer and an Auto Broker?

Generally speaking, Auto Dealers sell new or used vehicles from their on-site inventory at their dealership. Auto brokers have more flexibility in the type of vehicles they can offer, and they are not limited to the inventory of a single dealership. They can source vehicles from a variety of sources.

A Dealer may choose to be both an Auto Dealer and an Auto Broker.

Here is an example to illustrate the difference between an auto dealer and an auto broker:

John is a car buyer who is looking to purchase a new car. He finds out the local auto dealership has a limited selection of cars and the prices are non-negotiable. John leaves the dealership feeling frustrated because he was unable to find the specific car he wanted at a price he was willing to pay.

Later, John contacts a local Auto Broker and tells them what type of car he is looking for, including the make, model, and specific features he wants. The Auto Broker has access to a network of dealerships and within a few days, the Auto Broker is able to locate the exact car John was looking for and negotiate a better price on his behalf. John is thrilled with the results and is able to purchase the car he wants at a price he is comfortable with.

In this example, the auto dealer was limited by their inventory and unable to negotiate on price, while the auto broker could access a wider range of vehicles and negotiate a better price for the customer. This highlights the difference between an auto dealer and an auto broker and the benefits of working with a retail dealer with their broker endorsement.

How do you become an Auto Broker?

Most states require Auto Brokers to obtain a license like an Auto Dealer. Several states don’t have a different Broker requirement and allow any licensed Dealer to provide Broker services. To determine the specific requirements for becoming an auto broker in your state, consult your state’s Department of Motor Vehicles or a licensed auto broker.

How do you become an Auto Broker in California?

California requires you to be a licensed “Retail” dealer to be able to add the “Auto Broker Endorsement” to that license. You can add the broker endorsement while applying for your license or anytime in the future. The California DMV has 3 general steps:

  1. Take the Online DMV Pre-License Training 
  2. Pass the 40-question test at the DMV
  3. Apply for your Dealer License and add the Broker Endorsement

We have a free “12 Step Checklist” to get a California Dealer License.

How much does it cost to be an Auto Broker?

Adding a Broker endorsement to your license is inexpensive once you have obtained your Dealer license. For example, California only charges $100/yr and you can remove it at any time.

Benefits of being an Auto Broker

  1. Flexibility:
    You can set your schedule and work independently with little to no inventory.
  2. High earning potential:
    Successful Brokers can earn a significant income by earning commissions on leases and vehicle sales.
  3. Knowledge of the Industry:
    You will gain a deep understanding of the car buying process and the many options available to buyers.
  4. Networking:
    The opportunity to build relationships with various industry professionals, including car dealers, finance companies, and car buyers.
  5. Helping Customers:
    Help customers find the perfect vehicle through your network of a wide variety of different dealers.
  6. Negotiating Power:
    You will have and learn the skills and knowledge to negotiate the best deals on cars and financing terms for your clients.
  7. Special Plates (Dealer Plates):
    Auto Brokers in California (for example) also get dealer plates to drive their inventory vehicles.

How much money do Auto Brokers make?

Typically, Auto Brokers earn a commission (not a salary) from the dealership for each vehicle they sell or lease. The commission can range from a few hundred dollars for a lower-priced vehicle to several thousand dollars for a high-end vehicle. The exact commission is usually negotiated between the auto broker and the dealership, and the amount can vary depending on a variety of factors, including the type of vehicle, price, arrangements with the selling dealership, and the level of service provided.

Auto Brokers may charge a fee to the customer for their services in addition to the commission earned from the dealership. The fee can be a flat rate or a percentage of the vehicle’s purchase price.

Like any other profession, the earning potential for an Auto Broker can be influenced by their experience, location, market conditions, and the individual Broker’s efforts and abilities. The more successful an auto broker is in generating business and closing deals, the more money they can potentially earn.

Ways to make money as an Auto Broker

Auto Brokers can sell vehicles and refer lease deals in any state, online, or in-person. Here are some other ways that an Auto Broker can generate revenue:

  1. Commission-based sales:
    As mentioned earlier, auto brokers can earn a commission from the dealership for each vehicle they sell or lease. The commission is usually a percentage of the vehicle’s purchase price or lease amount.
  2. Service fees:
    Some auto brokers charge a fee to the customer for their services in addition to the commission earned from the dealership. The fee can be a flat rate or a percentage of the vehicle’s purchase price.
  3. Volume bonuses:
    Some dealerships may offer volume bonuses to auto brokers who sell a high volume of vehicles in a given period of time.
  4. Upselling:
    Auto brokers can earn additional revenue by selling additional products or services, such as extended warranties, gap insurance, or vehicle accessories, to customers during the sales process.
  5. Marketing and advertising services:
    Some auto brokers offer marketing and advertising services to dealerships and may earn a fee for these services.
  6. Leasing management:
    Auto brokers specializing in leasing can earn revenue by managing the leasing process for both the customer and the dealership, including negotiating terms and handling paperwork.

Where can I find an Auto Broker near me?

If you are in the market for a new or used vehicle, you can find an auto broker near you by searching online for “auto broker near me” or by area like “auto broker near me in Los Angeles”. This will bring up a list of auto brokers in your area, their contact information and reviews from previous customers.

When choosing an auto broker, it’s important to consider their experience, reputation, and the types of vehicles they specialize in.

Once you have chosen an auto broker, they will work with you to identify the type of vehicle you are interested in and help you find the best deal. They will handle the negotiation process with dealerships and help you complete all the necessary paperwork. With an auto broker on your side, you can feel confident that you are getting a fair price and that the buying or leasing process will be smooth and stress-free.

You can also check your state’s the Department of Motor Vehicles (DMV) and see if they have a list of licensed Auto Brokers. California’s DMV has a dealer license search listed on their website.