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Buying a car from a dealer
If you’re buying a lightly used car, up to around three years old, it can be confusing as to which is the better option - a private sale or heading to a dealership.
Buying a new car can be exciting. There’s a lot to consider, such as insurance, registration, a new car loan if you're getting financing, and where to actually buy the vehicle. There are plenty of resources available to research used car prices, but when buying a car, there’s a lot more to consider than just the price, especially when it comes to buying at a dealer compared to a private sale.
Buying a car from a dealership presents quite a few pros, mostly on the factor of sheer ease and convenience, while having only a couple of cons.
You can get someone to do the hard work for you: By using a free car buying service like OnlineAuto.com.au, you can get a brand new car from a dealer at a great deal without the hassle of negotiating with the dealer yourself.
Inspected cars: All cars sold through a dealership must be inspected and pass roadworthy. They are also protected under Australian Consumer Law, and used vehicles - depending on state - usually have their own mandatory statutory warranty, too.
Free from encumbrance: By law, cars sold through a dealership must also be free of encumbrance, which means it won’t have a loan owing on it from the previous owner.
Convenience: Aside from the above points helping to alleviate worry, you can realistically walk in to a dealership and walk out with a set of wheels on the same day, and not have to worry about roadworthy certificates, inspections, organising a time to meet and so on.
Trade-in: Dealerships also accept almost any vehicle for trade-in, which can be handy because it saves you having to sell your old car, which can also be a pain. Trade-in vehicles can also be used as an additional bargaining chip to secure a better price on the new (used) car. In this way, dealers are a ‘one stop shop’.
Can be more expensive: Dealerships have overheads, and the convenience can come at a price. However, dealerships don’t actually make a lot of money on the cars themselves, which brings us to our next point.
Sales and financing pressure: Dealerships make money off the extras they sell, such as car tint, as well as their in-house car loans. These car loans are often more expensive than what you can get on the open market, so it pays to shop around and perhaps get pre-approved for a car loan before you start shopping.
Buying a car privately essentially means purchasing it from another regular person, like yourself. However, the car may not be so regular!
It can be cheaper: Private sales are generally cheaper than dealerships due to the lower overheads. However, in the wake of COVID-19 and supply constraints, this may be heavily model-dependent, so do your research.
Less ‘pressure’: A private seller is less likely to pressure you into buying on the spot, and they (probably) don’t have a window tinting service to pressure you to use.
Need to do more due diligence: No matter how good the car looks, there’s always going to be question marks over the true condition of the vehicle. Inspections and roadworthy certificates only go so far in ensuring the condition of the vehicle.
Fewer legal protections: In the event your car blows up as soon as you leave the seller’s neighbourhood, you likely can’t come back and demand a refund.
More running around: Between you and the seller, you have to organise a roadworthy certificate, a bill of sale, transfer duty slips, personalised plate removal or transfer if applicable and more - this can all be a headache that may be worth heading over to a dealership for, instead.
Harder to get a secured loan: If the car is older than a few years old, it could be harder to get a competitive secured car loan.
If you’re ready to purchase a lightly used set of wheels, speak with one of our lending specialists today to get pre-approved for a loan before you hit the dealer showroom floor.
Other helpful resources:
As Australia's leading online lender, loans.com.au has been helping people into their dream homes and cars for more than 10 years. Our content is written and reviewed by experienced financial experts. The information we provide is general in nature and does not take into account your personal objectives or needs. If you'd like to chat to one of our lending specialists about a home or car loan, contact us on Live Chat or by calling 13 10 90.