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Buying a Car

Buying from a Dealer vs. Private Party: What You Need to Know

MyFirstCar Team · · 5 min read

You’ve decided to buy a used car (smart move). Now comes the next question: do you buy from a dealership or a private seller?

Both options can land you a great car. Both can also land you a headache. The difference comes down to pricing, protections, and how much legwork you’re willing to do. Let’s break it all down.

Buying from a Dealer

The Pros

Consumer protections. Dealers are regulated by state and federal laws. They have to disclose known defects in many states, and they can’t legally roll back odometers or hide salvage titles. If something goes wrong, you have legal recourse.

Financing on-site. Dealers can arrange financing right there, which is convenient. You can compare their offer against your bank or credit union’s rate and pick the best one. Some dealers also offer certified pre-owned (CPO) programs with extended warranties.

Trade-in convenience. If you’re selling a car too, a dealer will take it as a trade-in. You’ll get less than you would selling privately, but it’s a lot less work, and in many states you only pay sales tax on the difference between your trade-in and the new purchase.

Warranty options. Even on used cars, many dealers offer short-term warranties (30-90 days) or the option to buy extended coverage. CPO cars come with manufacturer-backed warranties that can be very solid.

Selection. A dealer has dozens or hundreds of cars on the lot. You can compare multiple options in one trip.

The Cons

Higher prices. Dealers have overhead — rent, staff, insurance, advertising. That all gets baked into the price. Expect to pay 10-20% more than you would for the same car from a private seller. On a $15,000 car, that’s $1,500-3,000 extra.

Dealer fees. On top of the sticker price, you’ll face documentation fees ($100-700+ depending on state), and potentially other add-ons. We’ve got a whole post on that.

Pressure tactics. Not all dealers do this, but some will push hard on add-ons in the finance office — extended warranties, paint protection, gap insurance. It’s not always a bad deal, but it’s easy to feel pressured into things you don’t need.

Buying from a Private Seller

The Pros

Lower prices. This is the big one. Private sellers don’t have dealer overhead, and they’re usually motivated to sell. You can often negotiate a price that’s $1,000-3,000 below dealer pricing for the same car.

Negotiate directly. There’s no salesperson playing middleman. You’re talking to the person who actually owns and drove the car. You can ask real questions: “Why are you selling? What’s been repaired? Any issues I should know about?”

No dealer fees. The price you agree on is pretty much the price you pay (plus tax and title when you register it).

The Cons

No warranty. When you buy from a private seller, it’s almost always “as-is.” If the transmission fails the next day, that’s your problem. This is why a pre-purchase inspection is absolutely essential.

Financing is on you. Private sellers want cash or a cashier’s check. You’ll need to arrange financing through your bank or credit union before you shop. It’s not hard, but it’s an extra step.

More risk. Private sellers aren’t regulated the same way dealers are. While most are honest people just selling their car, you need to be more careful about:

  • Title issues: Make sure the title is clean and in the seller’s name. Never buy a car with a “jump title” (seller’s name isn’t on it).
  • Liens: Check that there’s no outstanding loan on the car.
  • Scams: If a deal seems too good to be true, it probably is. Never wire money or pay before seeing the car in person.

Paperwork is DIY. You’ll handle the bill of sale, title transfer, and registration yourself. It’s not complicated, but you need to get it right.

The Paperwork: What’s Different

At a Dealer

The dealer handles almost everything. They’ll prepare the sales contract, handle title transfer, and often process your registration and plates. You sign, you pay, you drive away. Easy.

Private Party

You’ll need:

  1. Bill of sale — Both parties sign, include VIN, price, date, and contact info. Your state’s DMV website usually has a template.
  2. Title transfer — The seller signs the title over to you. Check your state’s requirements — some need notarization.
  3. Odometer disclosure — Required for cars under 20 years old in most states.
  4. Registration — You take the signed title and bill of sale to your local DMV to register the car and get plates.
  5. Insurance — You need insurance before you drive it home. Call your insurer before you go to pick up the car.

How to Protect Yourself Either Way

Whether you buy from a dealer or private party, do these things:

  1. Run a vehicle history report. Carfax or AutoCheck. Costs $25-40 and can save you thousands by revealing accidents, flood damage, or title issues.
  2. Get a pre-purchase inspection. Pay an independent mechanic $100-200 to look it over. Any honest seller will agree to this. If they refuse, walk away.
  3. Check the VIN. Run it through the NICB’s free VINCheck tool to look for theft or salvage records.
  4. Test drive it properly. Highway, city streets, parking. Listen for weird noises, check the brakes, make sure the AC works.
  5. Don’t rush. There will always be another car. If something feels off, move on.

So Which Should You Choose?

Buy from a dealer if:

  • You want a warranty and peace of mind
  • You’re financing and want the convenience of one-stop shopping
  • You prefer CPO cars with manufacturer-backed coverage
  • You’re not comfortable handling paperwork yourself

Buy from a private seller if:

  • You want to save money and are willing to do more legwork
  • You’ve done your homework and know what to look for
  • You have financing pre-arranged
  • You’re comfortable with a pre-purchase inspection process

The Bottom Line

Neither option is inherently better — it’s about what fits your situation. Dealers offer convenience and protection at a higher price. Private sellers offer savings but require more diligence.

For a first car on a budget, private party can stretch your dollars further. Just don’t skip the inspection and history report. Those small upfront costs can save you from a very expensive mistake.

MyFirstCar makes it easy to keep all your car’s info in one place — purchase details, maintenance history, and upcoming service reminders. It’s like a co-pilot for car ownership. Get the app →