Buying a Used Car: Private or Dealer?

Illustration of Buying a Used Car: Private or Dealer?

Posted: , by Jade Carter

So it’s time for a ‘new’ car (or truck). Buying new isn’t an option for you based on several reasons, namely the up-front cash commitment or possibly some underlying credit issues. With the clear path towards looking at a pre-owned vehicle, there’s one last major decision to consider; whether to buy privately or approach a reputable pre-owned dealership.

In all honesty, gone are the days of the shady used car salesman. While you’ll still find shops that rely on commission sales staff or ‘curbers’, there are enough protections and warranties available to protect you for the first few months after the purchase. There are just a few additional thoughts to consider when determining whether to pursue a vehicle privately or through a dealership.

 

Buying a Used Car from a Private Seller

There can be many benefits from buying your next pre-owned car or truck from a private seller. There are also quite a few considerations to be aware of before you hand over your hard earned cash.

Price

Sellers are usually quite eager to move their vehicle and can often be haggled with. Prices will generally reflect very closely with the depreciated value often associated with the ever present Kelly Blue Book (KBB). The buyer can often negotiate a much better price depending on the commitment of the seller especially if the asking price is higher than what is listed in the KBB.

Vehicle History

A private seller will have much better knowledge of the vehicle and its history than a dealer. You’ll have an opportunity to ask some very specific questions about the maintenance of the car or truck. For instance a private seller will be able to tell you whether the timing belt was replaced, when the brakes were last checked and if there was any work performed, how often the oil was changed or if the transmission fluids have seen any servicing. An honest private seller will usually share the little nuances that make the care unique.

Risk

However, buying privately carries a huge amount of risk that is borne entirely by the buyer. Once the transaction takes place there’s nothing to protect you once the papers are signed and the keys are in your hand. There’s no such thing as a private sellers warranty so you really need to be sure there isn’t anything obviously wrong. The only way to educate yourself about the car is to acquire any of the numerous car reports out there. Services such as Carproof, CARFAX, ICBC reports and AutoCheck are some of the most frequently referenced reports. They will help you gauge the repair history of the vehicle and don’t hesitate to take your mechanic along for the test drive!

Inspections & Emissions

In some regions there are specific requirements for emissions tolerances that only a certified shop can deliver. Be sure to know what the inspection requirements are for the province that you will be operating the vehicle in and whether the model year falls into that category. Generally, emissions regulations apply to on-road vehicles including passenger vehicles, sport utility vehicles, trucks, buses, motorcycles, etc. manufactured after Jan, 1 2004.

 

Buying a Used Car from a Dealer

Buying a used car from a dealer isn’t what it used to be. Dealers are held to a particular standard that you should familiarize yourself with.

All dealers must be accredited by the Vehicle Sales Authority of BC (VSA) and must adhere to specific laws. These laws are in place to protect you, the buyer so you can feel much more secure in your purchases.

Price

Used vehicles purchased at a dealer are generally more expensive so some additional charges that you will often find attached to the price tag might include:

  • Dealer preparation costs
  • Sales Tax
  • Documentation and ‘administration’ fees
  • Dealer specific insurance and licensing costs
  • Additional vehicle option charges
  • Charges for repairs while the vehicle has been at the dealership
  • Interest charges if you decide to enter into a financing arrangement

Those costs can add up quickly, but attached to those costs is the peace of mind that you take with you when driving the car off the lot.

However, you also have a trade-in opportunity. If your current vehicle is worth them reselling, you’ll be able to apply the value of the car to the new purchase. You’ll get less than you would in a private sale, however the convenience of the trade-in coupled with financing could get you into a very nice ride.

Financing

Dealerships make it extremely easy to drive off the lot with a car based on the availability of financing options. Many will take on the high risk clients with bad credit rating, bankruptcy filings or perhaps are in a divorce proceeding. Thanks to financing you’re not expected to provide the full cost of the vehicle up front.

Risk

The risk associated with buying a used car or truck from a dealer is significantly lower. This is based primarily on several of the legal requirements that they must meet as per the direction of the VSA. Many dealerships offer ‘certified pre-owned’ vehicles which will have undergone a multi-point inspection. Additionally, to satisfy their obligations based on the VSA they must provide the following:

  • Whether the vehicle was brought in from or registered out of province which might indicate possible salt erosion
  • Whether the car has previous damage costing over $2,000 total
  • Whether the vehicle was previously registered as an emergency vehicle, police car, taxi, rental or lease or was involved in organized racing
  • The accuracy of the odometer, mileage and model year

Limited warranties are a huge plus when buying a used car from a dealer; this virtually eliminates the risk associated with private purchases. While the time frame is usually quite limited, it’s enough time to gauge any unseen issues or any second thoughts you might be having with the vehicle.

Used car dealerships have a reputation to uphold. Bad press will hit them in their pocket books so it’s in their interest to provide the best possible experience to every customer.

Vehicle History

On the other hand, dealerships will not have the same level of knowledge about the vehicle’s history and maintenance record. Their relationship with the car begins when it hits the lot. Recent brake work, transmission service, clutch repairs and minor damage repairs are unknown and no report will detail this information. Only the presence of new looking parts or information shared by the last source might shed some light on its recent history.

 

Arm Yourself with Knowledge and Preparedness

In the end you will need to make a decision that best fits your current financial situation. If you buy privately, you’ll bear a huge amount of risk. Try to generate a couple of the top condition reports out there and reference the Kelly Blue Book for an appropriate resale value.

If you head to the dealership, be sure to ask about their reports and warranty’s. Financing is a huge bonus if you can afford the monthly spend.

Have you had a recent experience with a dealership or a private seller? We’d love to hear about it; drop us a comment below.

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