SJ Financial

Dealership or Private Sale – What’s the best option for buying a car?

Written by Sandra on Dec 20, 2018

Buying a car can be stressful. For some of us it’s one of the largest transactions we’ll ever make!


If you’re looking to buy a car you have probably considered some vehicles from car dealers and others from private sellers. Obviously, you want to get the best deal, but there is more to consider than just the sticker price.


So, should you go with a dealer or private seller? We’ve outlined some pros and cons for both options.



One of the strongest arguments for buying from a private seller is that you have the upper-hand and are able to negotiate to get the best possible price. If the seller needs to sell the car urgently, then your position is even stronger.


Car dealers on the other hand know the value of the cars they sell, and because they sell cars every day, they know every tactic to get the most money for what they sell. Dealers have to cover their margins and make sure they make a profit, with most working on commission, so on price alone you are unlikely to get the cheapest deal.



Dealers make buying a car easier, as they handle all of the paperwork, including transfer of title and registration. In most cases, reputable dealers will have thoroughly inspected the cars they sell and if necessary, carried out repairs. But don’t rely on this – always carry out your own inspection or call in an expert (mechanics can conduct inspections of any car, which can save you wasting a lot of money in the long run).


Vehicle History

When it comes to vehicle history, a private seller will likely be able to give you more information than a dealer. After all, dealers go through hundreds of cars each year, while a private seller likely knows the ins and outs of their vehicle. Always ask for owner history and accident history, as well as service history. You should also consider requesting a car history report (there may be a cost), which could include valuable information about the vehicle such as:

  • Insurance claims
  • Finance owing
  • Odometer check
  • Stolen vehicle check



When you purchase a car through a licensed dealer, the car will be covered by a statutory warranty which guarantees that certain defects discovered after purchase will be repaired for free within the warranty period. Dealerships may also be able to offer you extended warranties at an additional cost.


You don’t get any formal guarantees from a private seller, so once you’ve signed the transfer papers and paid for the vehicle, any problems that the car develops after purchase are your responsibility.



The greatest advantage of buying through a dealership is that there are financing options available – dealership finance or car loans. Dealership finance is offered by the car dealership and usually comes with very low interest rates, but you will be required to pay a lump sum at the end of the loan term. With a car loan, if approved you will receive a lump sum payment to purchase your vehicle.


Some banks will only offer an unsecured loan (with a much higher interest rate) if purchasing through a private seller, or they might not finance the vehicle at all. This is because they are concerned that the seller wont accurately describe the car’s condition, given that the seller isn’t a registered business and doesn’t have their reputation on the line.


There are undoubtedly advantages and disadvantages of buying from both car dealerships and private sellers, so it is important to go with the option that best suits your situation.

If you need to finance a new or used vehicle, get it contact with us. Whether it’s for personal or business use, our finance consultants are available to source the best deals to make sure you get the best rate possible.


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