Buying a used car from a private party seller is an alternative to buying from a dealership. Like any transaction, there are pros and cons to buying from a private seller. Before forking over your money, make sure you have fully researched the positives and negatives.
One of the main reasons people look to the private seller market for used cars is the opportunity for lower prices. Private parties essentially eliminate the middleman, which means they can usually beat the price you would pay at a dealership for a similar car. As an example, Kelly Blue Book shows the private party price of a used 2012 Acura RL with 23,000 miles in "excellent" condition as $40,723 as of June 2013. The same car at a dealer had a recommended price of $43,423.
Another benefit of a private party purchase is that you avoid some of the typical used car tricks and tactics consumers don't like. First, you don't have to worry about the back-and-forth haggling with a professional sales manager. While you might negotiate on price, a private seller doesn't usually engage in high-pressure selling like some dealer representatives. With a private party purchase, you also don't have to worry about filling out paperwork and getting sold on insurance and warranty programs by an aggressive finance manager who simply wants to make more money for himself and the dealer.
With a private party used car purchase, you miss out on some of the guarantees a dealer offers. Private parties don't provide warranties that you often get with a used car purchased through a dealer. Private sellers also don't have to follow the same regulations and sales laws that dealers do. For example, dealers in most states must follow "cooling off" laws whereby you can return a car within a couple days if you change your mind. In most private party transactions, what you see is what you get. Unless you pay an attorney to write up a contract giving you the right to return the car for specific problems, you're stuck with it once you pay your money and drive away.
Finalize Paperwork Alone
When you buy a new car with a dealer, the dealership typically manages all of the registration paperwork. This service saves you a lot of time and hassle. With a private party sale, you have to take the title to your local department of motor vehicles. In some communities, this might mean you have to stand in line for an extended period of time, fill out paperwork and pay the registration fee separate from your car payment.
- Barry Austin Photography/Digital Vision/Getty Images