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Publish Date - November 15, 2021

Author: Greg Thibodeau

Categories:   Tips & Insights For Car Buying    Vehicle & Buying Research   

Dealership vs. Private Party Sale: 9 Key Differences When Buying a Car

There are a few key differences between dealership and private party sales. Some of these differences affect how much money you spend and others will affect how much time you have to invest in the process. Where you choose to buy your next car can alter the whole experience.

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There are a few key differences between dealership and private party sales. Some of these differences affect how much money you spend and others will affect how much time you have to invest in the process. Where you choose to buy your next car can alter the whole experience.

1. Vehicle Price

A dealership has overhead such as rent, advertising, and employee wages. The dealership needs to make a profit and they can’t sell vehicles below a certain price or their business will be losing money. This puts a limit on how much negotiating you can do with a dealership.

Private sellers are often more willing to negotiate and give you a better deal. A car in a private party sale doesn’t get as much exposure as one at a dealership making it more difficult to sell. Private sellers are often more motivated to close the deal, especially if they need the space for a new car.

2. Convenience

The dealership is open during operating hours and you can go car shopping at your convenience. Private party sales require a buyer and a seller to coordinate schedules. A private seller likely has a job and other obligations that take priority over you.

A dealership is a one stop shop for your vehicle purchase needs. They offer services such as financing, warranty, and roadside assistance and can facilitate repairs, additions, and customizations. A dealer will even buy your old vehicle if you’re looking to sell. With a private party sale you have to handle each of these aspects on your own.

Another service that dealerships offer is the transfer and registration of the vehicle. The dealer takes care of all the paperwork and they know exactly what needs to be done so they will get it right. In a private party sale the title transfer, bill of sale, and registration have to be handed by you and the seller.

3. Peace of Mind

Buying a vehicle from a dealership provides more peace of mind. The dealer offers better legal protection and is bound by strict state and federal laws. Furthermore, the dealership has a reputation to maintain and it’s in their best interest to make customers happy. It is unlikely that they will deliberately sell a defective vehicle.

The used cars at the dealership are inspected and repaired as needed before they are sold. They can sell cars as certified pre-owned vehicles ensuring that a licensed mechanic is performing a detailed inspection. The dealer has to provide a history check and give you a CARFAX report showing ownership, accidents, and repairs that the car has had.

4. Warranty

Many dealers offer short-term warranties on used vehicles and will make repairs if issues are discovered soon after purchase. Private party sales are usually sold “as is” taking all responsibility off the seller. If you find problems with the car after you buy it you’re usually stuck with it.

A private seller generally doesn’t offer any type of warranty at all. It’s very important to have any private party sale vehicle inspected by a good mechanic prior to purchase. Otherwise you could end up with an unsafe car that you can’t drive and can’t afford to fix.

5. Vehicle Selection

Most people like to look at multiple cars before settling on one. If you’re looking to make a purchase through a private party sale you are likely only seeing one vehicle at a time. It’s going to take a fair bit of legwork to get through several cars when you factor in your travel time.

A dealership has many cars to choose from on the lot. Most have both new and used vehicles in stock at all times. You can view multiple vehicles in minutes that might take all day with private party sales.

6. Pressure to Buy

The dealership has a professional sales team that is trained to get customers to spend money. They will encourage you to buy a vehicle and they will push upgrades and add ons to boost their sales. Furthermore the dealership has many cars on the lot and you may be tempted by more expensive options.

A private seller doesn’t have a quota to hit or a commission to make. They want to get rid of their vehicle at a good price but they are not trained in high-pressure sales tactics. The atmosphere is generally more relaxed in a private party sale and there is less pressure to buy.

7. Financing options

Most dealerships offer financing for your auto loan and while their rates aren’t always the greatest, you do have the option to take their offer. In a private party sale you are responsible for securing your own financing with a bank or credit union prior to purchase. You can make the process simple and compare quotes quickly with myAutoloan.

Getting financing for a private party sale vehicle is not as easy as financing a dealership car. There is more risk involved for banks because the seller may not be honest about the car’s condition. If the vehicle turns out to have serious problems it may be valued at much less than the amount of the loan. This additional risk means banks have to charge higher interest rates and have more strict rules on these types of loans.

8. Taxes

Depending on where you live, the taxes you will pay on your next vehicle can be affected by where you buy. In some states there is no sales tax on private party sale vehicles. This can save you a lot of money and make private party sales more lucrative.

In other states the value of a trade-in reduces the purchase amount and the taxes that are due. In this case buying from a dealership can offer you bigger savings. Check local laws before setting out and know what you’re getting into before you buy.

9. Vehicle History

When you’re purchasing a vehicle through a private party sale you get to know the person who owned the car before you. The previous owner probably has more information about the vehicle history than a dealer does. They know everything that has happened to the car while it was in their possession and having driven it frequently, they know all of the vehicle’s quirks.

Dealers go through hundreds if not thousands of cars. They don’t have a relationship with the vehicles they sell and can only tell you what the CARFAX report shows. If a private seller is honest, they can divulge much more detailed and often relevant and useful information.

Dealership and private party sales both have their pros and cons. To choose the best option you need to look at your needs and see which choice is best for you.