Buying a Used Car: Dealer or Private Party?

When buying a used car you have three main options for purchasing that vehicle. You can go to franchised dealership, a private dealership, or you can buy directly from the previous owner. No matter which option you do choose though, you want to be diligent in your research. Don’t take everything the other person is telling you at face value and 100% truth as they are trying to make a deal just like you are. You always want to retrieve a vehicle history report of whatever car you are buying and have the car thoroughly inspected by at trusted mechanic. Each option has their own benefits and drawbacks and I’m hoping to help narrow these options down during your search.

Franchise Dealership (ex. Ford, Honda, Chevrolet, Hyundai, etc)

Pros:

  • Dealership has a reputation to maintain and should hopefully be standing behind their product
  • Most dealerships will sell cars they foresee being a problem at an auction
  • Can purchase a car that is Certified Pre-Owned or has had an extended warranty for peace of mind
  • More financing options available and it’s easier to secure financing or incentives
  • Trade-in your old car

Cons:

  • Most expensive prices and less room for negotiation
  • Working with a professional sales staff and usually in a high pressure environment

Private Dealership (ex. Bob’s Used Cars)

Pros:

  • Dealership has a reputation to maintain and should hopefully be standing behind their product
  • Less expensive than a franchise dealership
  • Trade-in your old car

Cons:

  • Used car lots can pop up and go out of business much quicker than a dealership would
  • Potentially buy “fixer-upper” cars at auction that a franchise dealership would have passed on
  • Can still be just as high pressure as a franchise dealership
  • Car is usually sold “as-is”
  • Still more expensive than a private party

Private Seller

Pros:

  • Possibility of having the lowest price and being able to negotiate even lower
  • Less pressure than going to a dealership
  • Negotiations can be fairly straightforward once the owner sees you are a serious buyer
  • Can possibly get a read on the previous owner and their driving habits to get more insight into the condition of the car itself

Cons:

  • Car is going to be sold “as is” no matter what
  • Always uncertainties when dealing with a stranger (always meet somewhere public and complete the sale inside of a bank!)
  • Have to take care of the paperwork yourself: Title, registration, bill of sale
  • If you require financing, you will have to work this out with your bank and it’s usually less flexible than when buying from a dealer. Some banks will not even allow financing on cars over a certain age or mileage
  • You will have to sell your old car yourself, there will be no trade-in

Obviously these pros/cons are not set in stone and there are always exceptions to the rule, but I feel that this establishes a clear picture of the overall used car buying experience. The most important things to focus on are that the better deal can usually be had from buying from a private party, but buying from the dealer can bring peace of mind for a slightly higher price premium. There are always deals to found at all three places, and you can just as easily get ripped off by a dealership just like you can by a third party. The important part is to do your research and if you find something you don’t like, walk away from the deal if necessary.

photo credit: Used Cars via photopin (license)

2 thoughts on “Buying a Used Car: Dealer or Private Party?

  1. If you’re considering a private seller, check with your current mechanic. Many will offer to look over any car you’re really serious about without gouging you. Our guy actually did it for free. This could help ease your mind about a private sale. (Though we still went through a dealership.)

    • Absolutely, and even other mechanics will do it for around $100. I would even get a car inspected from a dealership if it is being sold as-is and isn’t certified pre-owned or anything. It’s a small price to pay to save yourself a major expense and headache down the line.

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