Car-buying service vs car broker vs member programs

Look for help buying a new car and you'll find three kinds of offer mixed together: car brokers, car-buying services that negotiate for you, and member programs such as Costco's or the ones built on TrueCar's dealer network. They can sound alike. The differences are in who pays them, who they answer to and what you have at the end.

Car brokers

A car broker arranges the purchase of a car for a buyer. Many do a lot: they find the car, agree the price, prepare the paperwork and sometimes arrange delivery.

Brokers are paid in different ways. Some charge the buyer a flat fee or a percentage. Some are paid by the dealer that sells the car, and some by both sides. Rules on who may act as a car broker also differ from state to state, so it's worth asking a broker how they're paid and whether they're licensed where you live.

Car-buying services that negotiate

These services take the exact car you've chosen, contact dealers, negotiate the price and give you the results. How far they go varies. Some stop at negotiated offers that you take to the dealer yourself. Others stay with you through the paperwork and delivery, usually for a higher fee.

Most charge the buyer a flat fee, from a few hundred dollars to around a thousand. Because the buyer pays, the buyer is the client.

Member programs

Costco's Auto Program and the programs built on TrueCar's network, which many credit unions, auto clubs and Consumer Reports offer, give members a set price from participating dealers. You pay nothing to use them.

Costco says participating dealers pay a participation fee, and that it doesn't negotiate individual sales. TrueCar says it doesn't broker or sell cars: it connects shoppers with its network of Certified Dealers. Consumer Reports says TrueCar pays it a flat fee for each car sold through its program.

What you get is convenience: a known price, and a dealer contact who's expecting you. What you don't get is anyone negotiating for you, or several dealers bidding against each other for your sale.

Who works for whom

The simplest test is to follow the money.

• You pay a flat fee: the helper answers to you and gains nothing from which dealer you choose.
• The dealer pays: it can be free and convenient, but the helper's income depends on where you buy.
• You pay a percentage: the fee rises with the car's price, or with the saving the helper reports.
• A member program: the price is one that participating dealers agreed in advance for members. It's an offer, not a negotiation.

None of these is wrong. You just want to know which one you're dealing with.

What you have at the end

• From a broker: often a finished purchase, with the details depending on the broker.
• From a negotiation service: written offers from several dealers that you can check and act on yourself.
• From a member program: a set price, from one dealer or a few.

Whichever you choose, ask for figures in writing as an out-the-door total, so taxes, fees and add-ons can't appear later. Our out-the-door price guide explains what that total should include.

Questions to ask before you sign up

1. Who pays you, and how much?
2. Do you receive anything from the dealer I buy from?
3. Will I get each offer in writing, with the dealer's name and contact details?
4. Whose name does the purchase go in, and who signs?

How we do it

We charge $399 flat. You tell us the exact new car you want, we contact several dealers and negotiate, and within 1–2 weeks you get a report with at least five negotiated offers and each dealer's details; you choose one and buy directly from that dealer. We do our best on every search, but dealers decide what they accept, so we can't promise a particular price.