by Andrew Rohrlich
Traditional Differences Between an Independent Dealer vs Private Seller
You can take specific steps when you buy a used car from an owner or dealer. These steps include choosing a vehicle, getting the vehicle history report, obtaining auto financing, paying taxes on the car, and addressing any of its problems. You may be asking: is it better to buy a car from a dealer or private seller? Well, you will have different experiences when you purchase an automobile from a reputable dealer than when you buy one from a private seller. Read on to learn more about the differences between a private seller vs dealer.
Independent Auto Dealer
Independent motor dealers have state-issued licenses, so they must follow protocols when a buyer wants to obtain a new vehicle. Such protocols include:
- Allowing the buyers to test drive the car.
- Giving the buyer a cooling-off period where applicable.
- Providing a clear title.
- Presenting a statutory warranty where applicable.
Many regard independent dealers as safer when purchasing a vehicle because of all the rules they must follow to keep their license and the resulting legal protections for a buyer. For example, if a car buyer experiences a monetary loss due to the actions of a dealer, the buyer has access to a claim fund that can make up for their loss. Dealers also provide coverage like extended warranties, allowing buyers to take their cars to manufacturers, and resolving problems after using a vehicles for long periods.
Additionally, people view dealers as safe because they must avoid engaging in unsafe, unfair, inaccurate advertising practices. States also enforce policies discouraging dealers from selling irreparable vehicles or cars with extensive mechanical, structural, or aesthetic issues. Dealers who break state or federal policies can face severe punishments. They may have to give their buyers full refunds, provide them with a replacement vehicle, or pay actual, incidental, or consequential damages, such as towing costs.
Another way dealers ensure safe purchases is by selling certified pre-owned vehicles. A certified pre-owned vehicle is an excellent choice if you want an affordable, gently-used car with a solid warranty. Reputable dealers usually acquire these vehicles, and third parties inspect, recondition, and certify them, making buyers feel confident that they are not buying junk cars. When you go to the lot of an independent dealer, you won’t access manufacturer-certified cars but may see cars with certification stickers on their windshield.
Private Car Seller
Unlike independent dealers, private sellers are unlicensed, so they are under no obligation to let buyers test drive their vehicles, offer cooling-off periods, send clear titles, or provide a limited warranty. When buying from an individual seller rather than a dealer, there are some things you will likely want to perform before making your final purchase decision.
- Obtain the vehicle identification number and vehicle history report.
- Inspect the vehicle in person with no interference from the seller.
The positive aspect of private car sellers is that they are generally more open to negotiation and will often sell cars for much less than a dealer would. For this reason, thousands of customers buy from private party sellers every day. If you are considering purchasing a vehicle from an individual, simply take precautions when meeting and negotiating with them and determine whether they have enough information about the car to sell it confidently.
Some private sellers will offer buyers certain protections, giving them peace of mind. A private seller may present a certified pre-owned vehicle with a limited warranty. The protections individual sellers can provide are not on the same level as those a dealership can ensure, but they can make the private party sale a more secure transaction.
The Advantages of Buying a Used Car From an Independent Dealer
The advantages associated with purchasing a used vehicle from a reputable dealership include:
- Choosing from a wide selection of vehicles.
- Receiving beneficial service offers and specials.
- Enjoying high-quality customer service.
- Having a simple car-buying process with available auto financing options.
- Looking at reviews left by previous customers.
Extensive and Unique Vehicle Selection
Reputable dealerships usually have extensive and unique selections of cars. They have used cars with various body styles, such as sedans, hatchbacks, coupes, roadsters, sports cars, SUVs, pickup trucks, minivans, and micro vehicles. If you are looking for a used car with a particular make, model, year, and color, you may only be able to find it at a dealership.
Potential Service Offers and Specials Through Dealer's Relationships
Motor vehicle dealers want to maintain good relationships with their customers because they want them to keep coming back every few years. They also want their customers to refer their family members or friends to them so they can increase sales. One of the most common tactics reputable dealers use to fall into the good graces of their customers is to offer them services and specials. Such offers could include a free oil change, discounted detailing, new tires, upholstery treatments, full tanks of gas, small business coupons, rustproofing, branded car accessories, extended warranties, or detailed maintenance schedules.
Personal Customer Service Experience
Customer service is a vital part of the automotive sales industry. Dealers often do all they can to make their customers feel comfortable and stay well-informed. They will invest time and money into blogs and social media pages so that customers know what types of cars are up for sale and how they can purchase them. Reputable dealers know customers like quick and easy processes, so they will use virtual conferencing platforms to conduct business with them and reduce wait times. Dealers also enhance customer service by letting buyers provide feedback about their experiences.
Simple Car-Buying Process and Financing Options
The car-buying and auto financing processes at a dealership are relatively straightforward and progress smoothly. The car the buyer is interested in will have a sticker price. If the buyer cannot pay the sticker price upfront, the dealer will work with them to find financing options. They will access the buyer's credit information and contact a credit union or other lending institution that can offer the buyer financing based on the details of their credit report.
Previous Customers Reviews Are Often Available
One of the reasons people like dealerships is that they can easily access online reviews of their services. Customers who purchased a vehicle from a specific dealer will write reviews describing how attentive or inattentive their dealer was, how professional they were, and if the used car they purchased was in good working order. You can use customer reviews to choose the best dealer in your area. You will likely be unable to access a single review if you were looking to purchase from a specific individual seller, so you would buy from them without knowing how trustworthy or dependable they are.
The Advantages of Buying a Pre-Owned Vehicle Through a Private Sale
Buying a pre-owned vehicle from its previous owner has its fair share of advantages, such as:
- Receiving attractive purchase prices.
- Having the ability to negotiate and control the buying process.
- Taking advantage of lower sales taxes.
- Gaining access to the vehicle's service history.
- Engaging in fast-moving deal-closing procedures.
Attractive Purchase Prices
Private car sellers grab the attention of potential buyers by presenting them with low prices. For example, they may list a gently-used vehicle (e.g., a less than five years old car) for several thousand dollars less than its actual worth. You will find more attractive purchase prices when using a private seller because they are not seeking to make the profit that a dealership must maintain to stay in business. Some sellers are willing to accept a capital loss and ignore a price difference if they can get rid of an old vehicle or obtain some funds that they can use as a down payment on a new car.
Improved Bargaining and Control Over the Car-Buying Process
Many individual sellers allow buyers to negotiate prices. They will present buyers with a private price that the buyer can accept, counter, or reject. Work with a private seller if you want a good deal of control during the car-buying process. Your private seller may allow you to respond to an unlimited amount of price offers, so you can settle on a price that works well for you. You would not be able to have much control over price points if you used the services of a dealer.
Typically Lower Taxes
Depending on where you live, you may pay less sales tax when you buy a vehicle from an individual seller than when you purchase a car from a dealer. You save a substantial amount of money when you reside in a state that does not place any sales taxes on private vehicle sales. Check the regulations in your jurisdiction to determine how much you can save on sales taxes if you worked with a private seller, not an independent dealer.
Knowledge of the Vehicle's Service History
Individuals selling pre-owned vehicles can provide you with their vehicle's service history. They can give you their service records or vehicle history report so that you can pinpoint what repairs or alterations the vehicle underwent or when it received its last checkup or maintenance routine. You may not be able to get such information if you purchase a used car from a dealer because the car's previous owner may not have presented the dealer with its detailed service history. You can also gain first-hand knowledge from the individual seller about any accidents the vehicle has endured. Such knowledge could help you avoid accidents in the future.
Quick Deal-Closing Procedures
Dealers must fill out lots of paperwork when completing sales, making the closing process very time-consuming. On the other hand, private sellers do not have to submit lots of paperwork, making their closing process run much faster. You may be looking for a quick sale because you need a car as soon as possible. If so, a private seller should be able to meet your needs.
This article was written by Andrew Rohrlich. As a brand and product marketing expert, Andrew Rohrlich has crafted products, experiences and communications for household names like Gap and for multiple automotive technology businesses. For nearly a decade Andrew has studied automotive retail in depth from a customer point of view and aggregated the industry’s best research, thought leadership and know how to provide credible and important information to auto shoppers and sellers.