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Aug 18, 2021

Buying Used Vehicles - Dealerships vs. Private Sellers

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Buying a vehicle can be both an exciting and stressful time. With so many options to consider – aside from leather or cloth – choices can make a big difference in your purchasing experience. One of the first choices to make is whether to buy from a dealership or a private seller.  
Before you get overwhelmed, let’s break it down so you feel more informed and confident in taking this first step. Choosing from where you’re going to buy your car can help many of the other decisions fall into place.

The Power of a Pre-Approval

If you will be financing even a portion of your vehicle, it's a great idea to get pre-approved before you shop. The pre-approval will help you understand how much you could afford to borrow based on your budget (and what the lender will allow) and can even help lock in your loan's rate. It removes some of the unknowns from the process to help you make the best financial decisions during the purchase.


Buying Used Vehicles from a Dealer


  • Financing Options. When you buy a used car from a dealership, you may have more financing options because of their relationships with lenders. Access to more financing options could give you the ability to shop around and make sure you’re getting the best rate possible on your auto loan. Keep in mind – you can do this independently but will likely take more effort on your part.
  • Wider Selection. Dealerships offer a much wider selection of vehicles than private sellers. If you’ve researched and saved up for a specific make and/or model with certain features, it’ll be easier to find what you’re looking for when shopping at dealerships than waiting for the exact vehicle you want to be posted online by a private seller. If you aren’t sure which vehicle is just right for you, starting at a dealership can at a minimum afford you the opportunity to test-drive different vehicles so you have a sense of what may be best.
  • Professional Sales Process. Once your lender and your vehicle selection are set, and you’re ready to make your purchase, closing may be much easier with a dealership. They are staffed with trained professionals who know how to do the appropriate paperwork and communicate with your lender efficiently so you don’t have to worry about tying up loose ends in the process.
  • Reputation Protection. Dealerships have skin in the game when it comes to providing a great auto buying experience. This is their business, so they want to do everything they can to protect their reputation. This means that most dealerships are trustworthy when it comes to selling cars that are in good repair and will do their best to provide an excellent experience.
  • Pricing. Selling cars for as much money as possible is how dealerships profit. You may have to negotiate in order to get the price you’re looking for. Protect yourself and do your research on a car’s worth using Kelley Blue Book and by comparing prices on similar vehicles.

Keep in Mind

Not all dealerships negotiate and are often priced to be competitive from the start. Before going into the purchase, ask if they would negotiate on price. Depending on their approach, you may decide to take another direction. 
  • Potentially Less Vehicle History. While some vehicle history may be tracked using online sites like Carfax, dealerships may not always know everything about the vehicles they are selling. Knowing that a car has been through the dealership’s check-up isn’t the same as knowing exactly when the vehicle may have been repaired previously, what kind of storage it may have been in, and whether the previous owner(s) performed routine maintenance tasks to keep up the vehicle’s condition.
  • Competition. Dealerships have a larger audience of shoppers who are all looking to buy a vehicle. That means they may be more willing to let you walk away from the bargaining table figuring another buyer may be along shortly to move their inventory. It also means that if you take too long to research and decide on a car, it may already be sold when you’re finally ready to move forward with the purchase.
  • Sales Pressure. Again, dealerships are in the sales business. Their staff is hired to sell vehicles, so sometimes their approach to closing the deal can feel pushy and uncomfortable. Especially if you’re a first time buyer, it may be easier to succumb to sales tactics and buy the first car you fall in love with or one outside your budget, rather than taking your time and getting the best price you can.

Buying Used Vehicles from a Private Seller


  • Pricing. Private sellers are motivated to get rid of the car they are selling, so they may be more likely to give you a better price than what you’ll find at a dealership. This isn’t always the case, so make sure you still do your research on the value of the vehicle to be prepared to back up your offer. Also, it’s a great idea to have a certified mechanic inspect the car before making an offer. If there are any major red flags or necessary repairs, you don’t want to get stuck overpaying for something that isn’t as valuable as you thought based on first-glance. It can also give you some bargaining room if you need it.
  • Vehicle History. A big benefit to buying a car from a private seller is that they can often tell you more about the car’s history. They’ll likely have more information than a dealership would on a car’s maintenance record, any accidents it has been in over the last several years, and what repairs have been made to it.
  • Lower-Pressure Sales. Most private sellers don’t sell cars professionally. They are more likely to be easy-going during any price negotiations and are motivated to move forward with the purchase
  • Financing Complications. Some lenders may not finance a vehicle sale made through a private seller. Make sure to talk to your preferred lender before you start car shopping so you know if this is a restriction.
  • More Manual Process. When you purchase a car from a private seller, it’s up to you to make sure all the necessary paperwork is completed and sent to your lender and the DMV. This means that the closing process can be slower and more tedious than it would be at a dealership.
  • Reduces Vehicle Selection. Buying a car from private sellers means you are at the whim of what individual people are selling. It’s never fun to find your ideal car only to realize that a specific vehicle has a mechanical issue or the seller is overcharging for it and have to walk away from the purchase. You often lose out on any accountability from the seller in these instances so be sure to feel informed and comfortable with the purchase before moving forward.
There’s no right or wrong way to buy a vehicle as long as you educate yourself on your options and take the time to understand the benefits of each route. Still not feeling quite comfortable with the process? Ask a trusted friend or family member who knows their stuff to help you through; you’ll be happy to have sound support during the exciting time.

Parts of this article were sourced from Kelly Blue Book, CarFax, and the MN DMV.

Contents of this blog article are intended to provide you with a general understanding of the subject matter. However, it is not intended to provide legal, accounting, or other professional advice and should not be relied on as such. Information may have changed since the publication date.

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