Dealer or private purchase? what is the best way to buy?

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Purchasing a car, boat or other asset can be a daunting experience at the best of times; especially for first time buyers. Buying it from a dealer or privately really can have some stark differences. I have experienced both and thought i would share with you what i know.

Buying from a dealer can feel like a safer option. After all, you have brand value behind franchised dealerships and non-franchised dealers are generally reputable. A licensed dealer must provide a 3 month statutory warranty on the vehicle you purchase, albeit, it may come with some exclusions. This will certainly give you some comfort that when you drive your vehicle out of the dealership, you carry with you some protection in the event that the vehicle is not mechanically sound. But how reliable is this warranty? Well, its as reliable as the dealers reputation and financial position. I have been in this industry for 25 years and smaller used car dealers come and go, like passenger trains. Some just don’t make it. It’s as simple as that. So you have to do your homework on the reputability of the dealership you are purchasing your vehicle from. There are some fantastic small and middle-sized used car dealerships who have stood the test of time. And they have done so by building a reputation in the industry for being attentive to customer needs.

Buying privately carries the risk of you purchasing a vehicle that has mechanical issues, if you are not sure what to look out for. And this could prove expensive.

So it is recommended that you have a registered mechanic perform a pre-inspection check on the vehicle. Take the vehicle for a test drive (on your own or with a friend) and take your time in doing so. Some times you can feel under pressure in the presence of the Seller, so test driving it can be a great way to “buy you some time”. During your test drive, pull over and inspect the engine compartment, check the log books for previous servicing, check the tyres for wear and make sure the air con is cold enough. You should also do this buying through a dealer – don’t automatically assume the vehicle is in great condition.

Buying through a dealer can also be more expensive than buying privately. Given the dealer is required to provide a warranty on the vehicle and recondition it before resale; as well as paying the salesperson, sales manager, buyer and everyone else involved in the sale. A margin for this has to be put on the vehicle. And guess who pays that margin – you do!

I’m not suggesting all vehicles are more expensive through dealers, but do your homework to compare the prices between a dealer and private seller.

Other factors you need to consider before buying privately or through a dealer are:

  1. Dealers are required to clear any financial encumbrances off the vehicle before they are brought in to stock. You must check this if you buy privately with a PPSR check. If these financial obligations are not cleared before you take possession of your vehicle, then the Lender retains the right to repossess the vehicle from you if the Sellers associated loan goes in to default.

  2. Dealers will trade your vehicle. If you have a vehicle to sell before you buy a new one, then a dealer will offer to trade this in for you. But again, they will generally offer you a lower price than you could get privately. For the same reasons i mentioned earlier – a dealer needs to cover their costs and retain a margin in the sale. The question is – are you prepared to do the work to sell it privately to retain that margin?

  3. If you are purchasing a new vehicle then you do not have much choice but to purchase from a franchised dealer. But consider other options such as buying a demonstrator vehicle – they generally have a substantial discount to a new vehicle. They still have low kms on the odometer.

  4. Purchasing from a dealer can be quite a daunting task too – the process of purchasing the car, and then being passed through to the after care and finance departments. It is important you take your time in all of your decisions. Do not be rushed and don’t feel pressured to make decisions that you may regret.

Buying a car from a dealer or privately has its perks and pitfalls. Do your research, take your time, get your budget in place and contact our finance team to organise a pre-approval, before you buy.

Enjoy the experience, stay in control of the process and take your time with all of your decisions.

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