One of the biggest reasons that people purchase a used car from a private party (individual) is they generally get a better price versus buying it from a dealer. The used car dealer has to make a profit to pay their overhead, so naturally they have to charge more for the vehicle. There can be some benefits to buying a used car from a dealer that outweigh the higher price.
A Car Loan and Financing a Used Vehicle
If the buyer needs to procure financing for a used car, it’s much easier to get a loan through a dealership. The dealer usually has a multitude of lending institutions that they do business with. They may even be able to get better financing rates then a buyer can get on their own because of their relationship with the banks.
There’s also a convenience factor that can’t be overlooked. The dealership is like a one stop shopping location. If a vehicle is purchased from a private party, there are other factors to consider that must be taken care of separately like:
- Financing
- Registration
- Insurance
- Extended warranties
- Taxes
- Add-ons and accessories
Used Car Lemon Laws and Sold As-Is
A used car that that’s bought from a private party is considered sold as-is. If the vehicle is purchased from a private party and the vehicle has mechanical problems, the purchaser doesn’t have much recourse. In other words it’s pretty much tough luck unless the buyer can prove fraud. When purchasing a used car from a dealer, the buyer may have some recourse under federal and state used car lemon laws.
Used Car Vehicle Trade-In
A used car buyer that needs to sell another vehicle can usually trade the vehicle in at the dealership. It’s simple, convenient and the dealer will take care of all the paperwork. The dealer usually treats the trade-in like it’s a down payment against the purchase. However, the trade-in value can be much less than the private party value. Before trading a vehicle in, find out what the car is worth.
Certified Pre-Owned Vehicles
Many new car dealers sell factory certified pre-owned vehicles. There can be some great benefits to purchasing a factory certified pre-owned vehicle. They usually come with a warranty and are held to a higher conditioning standard. Usually lower finance rates can be obtained from the manufacturer’s financial arm then using traditional lending institutions.
If pricing is a major consideration and the car buyer isn’t concerned about financing and vehicle reliability, then buying a vehicle from a private party is probably a better choice. If the car buyer doesn’t mind paying a higher price for convenience and reliability, then purchasing a used car from a dealer might be in order.
James Clausen - Clausen received a Bachelors Degree in Business Administration in Automotive Management and Marketing at Northwood University, graduating ...
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