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Pros and Cons of Buying a Used Car from a Private Party Seller

4/17/2013
When buying a used vehicle, most consumers choose to purchase from a dealership or a private party seller. A private party seller is an individual just like you, someone who owns a vehicle that they need to sell, and who is likely selling the vehicle themselves in order to extract maximum value for it.

There are several pros and cons of buying a used car from a private party seller. In the sections that follow, this article discusses the most significant of them.

Pro: Private Party Vehicles Cost Less
Conventional wisdom says that there are three values for a used vehicle: Trade-in, private party, and retail. In recent years, a new value has emerged at the top of the scale to cover certified pre-owned (CPO) vehicles. Of the four value ranges, the private party value is on the lower end of the scale.

Used vehicles sold by dealers cost more than used vehicles sold by private parties. That's because the dealer must cover the costs of reconditioning the vehicle, of advertising the vehicle, and of paying a salesperson a commission. Additionally, the dealer shoulders the administrative costs related to the purchase of the vehicle from the previous owner and related to the sale of the vehicle to the new owner.

A private party seller need not worry about this profit-killing overhead. Additionally, a private party seller is usually more eager to sell the vehicle as soon as is possible, and is typically more flexible on price during negotiation.

Pro: Clean, Well-Maintained Vehicles
Not all private party vehicles are in good condition. Some are even salvage vehicles, which means they've been repaired after a wreck, flood, or theft. This is why it is always smart to obtain an official vehicle history report for any used vehicle you're planning to purchase.

That said, a private party seller who has taken great care of a vehicle and who has all of the maintenance and service records for the vehicle is likely to try to sell it on their own. Owners who take such pride in their vehicle are less inclined to accept a dealer's trade-in offer, believing the car is worth hundreds, or thousands, of dollars more if they sell it themselves.

As a used-vehicle buyer, this is a benefit. The seller is likely interested primarily in receiving more money for the vehicle than the dealer offered them as a trade-in, while the buyer is able to purchase a clean, well-maintained used car at a big discount compared to what the same vehicle might sell for at a used car dealer.

Pro: No Games
Generally, private party sellers are in a hurry to sell their old vehicle, and if you demonstrate that you are a serious buyer, they are more likely to want to get the transaction completed quickly and with you. This is particularly true of owners who are selling popular models in popular colors because they have more market competition than people who are selling more rare models. This eagerness means private party sellers are less likely to play games with serious buyers, making it easier to negotiate, agree on terms, and get the transaction completed.

Con: Multiple Meetings with Strangers
Buying a used vehicle from a private party seller requires meetings with strangers to test-drive the vehicle, have the vehicle inspected, and to complete the transaction for the vehicle. The majority of the time, this is not a concern. Nevertheless, it is wise to always arrange meetings in busy public places, rather than at the seller's home, at your home, or in a secluded area.

Con: No Warranty or Guarantee
Used car dealers must abide by Federal Trade Commission rules as well as state regulations governing how they operate and sell vehicles. Additionally, dealers often "certify" their used vehicles, frequently provide short-term warranties, and sometimes offer a money-back guarantee. As a result, dealers generally sell only those used vehicles that are in good condition.

Used vehicles sold by private party sellers come with no warranty or guarantee of any kind, and are not certified in any way. When purchasing a used vehicle from a private party seller, the buyer must perform due diligence in the form of obtaining vehicle history reports, paying for professional inspections, and conducting a thorough test drive in order to make sure they're not making a purchase they may soon regret.

Con: Details, Details, Details
Buy a used vehicle from a dealer, and the dealer takes care of all the paperwork associated with the transfer of ownership, can help arrange financing if necessary, and can even buy your old car as a trade-in. Buy a used vehicle from a private party seller, and those details are the buyer's responsibility. You will also need to sell your old vehicle yourself, making you the private party seller in this scenario.

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