How are car brokers compensated? Well, there are a couple of methods that can be employed (and a third, illegal option sometimes used by unethical, unregistered brokers). The car broker can either be compensated by the client who has commissioned them to assist with their vehicle search, or they can be compensated by the dealership that is selling the vehicle. Car brokers cannot, however, legally be compensated by both their client and the selling dealership. This is highly illegal in Ontario and absolutely prohibited by law. But that doesn’t mean all brokers play by the rules!
Car brokers that collect from the selling dealership may offer what appears to be a “free” service to their client, but in reality their fee is still being paid for by the client; just in a round-about way. The car broker’s fee comes from the vehicle’s negotiable profit margin – an amount that could have otherwise been passed forward to you as savings. For example, if a broker negotiates a potential discount of $3,000 on a vehicle with the selling dealer, they could pocket $2,000 paid directly to them by the selling dealer allowing you to realize only $1,000 of negotiated savings. And it’s possible you’d never know how much you’ve actually paid for their services!
Those that are compensated directly by their clients (provided they’re not double-dipping!) should be acting on behalf of their client rather than as a commissioned salesperson on behalf of the selling dealership. I personally find this the more appropriate way to ensure consumers’ best interests are looked after. But of course, not all brokers are created equal.
Remember to perform your own due diligence to ensure you’re commissioning an OMVIC-registered and regulated auto broker who will not double-dip by collecting from both you and the selling dealer. Use OMVIC’s online search tool or call OMVIC (800-943-6002) to check if the broker is indeed registered – don’t just take the broker’s word for it or believe their website! It’s your hard-earned money, so ensure you’re not unwittingly giving it away! Be sure you’re hiring a registered broker operating within the confines of the law.
As always, I’m available to help with your vehicle needs. Don’t hesitate to get in touch!
416-477-9328 or toll-free at 855-STEER-ME