Whilst recently searching for a new car, I came to a crossroads: should I buy from a dealership, or should I buy from a private seller on somewhere like Craigslist? You’ve probably had the same car buying dilemma – ‘dealer reassurance’ or ‘lower cost private seller’. This post will explore the pros and cons to each and hopefully get you pointed in the right direction.
A general truth is that a vehicle will cost more when purchased from a dealership than when purchased from a private seller. While this is mostly true, one must consider the costs the dealer incurs from simply doing business as a car dealer: the costs to clean the car, the cost to maintain the car while it is waiting to be sold, and the cost of advertising the car. A private seller bares none of these costs and typically will be quite eager to sell the vehicle. This can open up sizable bargaining power for you as the buyer that will simply not be there when you’re shopping at the dealership. The car dealer has expenses he/she must consider and therefor has tight margins to operate within in every sale he/she makes. Dealer and incentive rewards not taken into consideration, your money will generally go further in a private sale.
But let’s take a look at some of those dealership incentives for a moment. Along with cash allowances and cash back offers, at a dealership you have one option you will rarely find in a private sale: financing. Unless you have a big pile of cash you’ve been saving for a while, or have good enough credit to take out a loan at the bank, you will be hard pressed to find a financing scenario in a private sale marketplace. Unfortunately in that world, it’s cash or nothing!
The dealership world can begin to look more attractive when you consider a few basic points: you know the car is going to work, you can finance it and you can be sure of your warranty terms before you drive off the lot. Another popular feature of a dealership is the option to trade in your old car which often provides a sizable chunk of the down payment on your new vehicle. It can perhaps even provide the whole thing!
Of course there are vehicles that are more uncommon or even non-existent in the dealership market. Collectibles, classics, and hotrods typically aren’t part of the traditional dealership’s business model. There are specialty dealers out there who specialize in these types of vehicles but they tend to deal in a much lower volume than the mainstream, modern car dealer. If these are the types of vehicles you are interested in then certainly pursue the private market before seeking out car dealerships of this variety.
Keeping this info in mind go and talk to some dealerships and even look on Craigslist a bit for the vehicle you’re considering.. it can’t hurt to try both. Either one can find you a great car at a great price, just be sure to do your homework before you buy!