Buyer beware: Pros and cons of private party purchasing

Posted December 4, 2017 10:59 a.m. EST

A vehicle is among the largest purchases the average person will make, along with their home and their education, so it is important to be educated for this key decision.

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Used vehicles are purchased in two main ways. The purchaser will either approach a private seller, generally the original owner, or they will go to a dealership.

Both of these routes have advantages, but there are some things the consumer should know before choosing a path. A vehicle is among the largest purchases the average person will make, along with their home and their education, so it is important to be educated for this key decision.

Dealers fully inspect used vehicles before putting them up for sale

Each make of vehicle tends to have a specific checklist for inspecting used models, but many refer to an "101-point inspection." In order to maintain association with the parent company, a dealership has to abide by strict quality control and consumer protections on the pre-owned cars they sell.

A private party may promise that the vehicle is in great shape, but the consumer does not have a guarantee that a full inspection has been done.

"Sometimes a buyer will see a car on the side of the road with a price taped to the window that looks too good to be true," said Corey King, sales and leasing consultant at Leith Acura. "It oftentimes is. There may be serious mechanical issues with the car, but there is no good way of knowing. The purchaser doesn't have the peace of mind that a dealership pre-sale inspection provides."

Dealership provide a paper-trail, and paperwork

Because it is their business, professional dealers make sure they know exactly where each vehicle came from and what happened to it along the way. It is regular practice for them to disclose the CarFax report to the buyer as they are considering the purchase. If there was an accident, a flood or any other mishap, it will appear on the report. Private sellers may provide access to this, but it’s not as likely.

Paperwork in general, like contracts and warranties, are also an upside that are provided by dealers to their customers.

Financing is available through dealerships

Because a vehicle purchase is one of the larger purchases people make, it often has to be financed.

A record 107 million Americans have car loans they are currently paying back. The dealerships are able to provide this service on site through their financing departments. In a private sale, the purchaser may be able to go to their bank with the seller and secure a payment contract, but it’s a more complicated process.

Prices at dealerships are not much more than with private sellers

Dealerships are under a lot of pressure to continually move inventory through their lots. If they don't price their stock aggressively, it will sit there.

Kelley Blue Book, Edmunds and other car pricing services have also given consumers fairly high expectations on pricing. They arrive armed with what is the lowest likely price for a vehicle.

Similarly, on the other side of the equation, private seller are now looking up in the same books what the estimated value of their vehicle is. This causes many of them to be unwilling to sell it for much less than this.

Car buyers do not always show up knowing what they want

At dealerships, consumers can benefit from the fact that there are many other options available.

Sixty percent of shoppers are willing to consider multiple models when they arrive, even if they already had a specific car in mind. A private party will typically only have that one car for sale, so there is less freedom to consider other possibilities.

"So often we see buyers stop in with one idea of what they are looking for and then drive off the lot in something they like much better," King said. "It can really help to see a number of options lined up, sit behind the wheel and consider the pricing and the features. Our job is to help them find the best overall fit."

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