Buying A Used Car From A Car Dealership Vs. A Private Seller

There are two ways to buy a car in Canada: through an established dealership or a private seller. Dealerships sell both new and used vehicles and operate under a defined set of rules and regulations. A private seller is someone who is selling their pre-owned vehicle outside of official channels.
Both options have their own pros and cons, but the decision ultimately comes down to your personal preferences and car goals. 

Key Takeaways

• Choose a Dealer if you want added security with warranties, certified pre-owned options, and a streamlined process for paperwork and financing. Be prepared for higher upfront costs and potential upselling.
• Choose a Private Seller if you’re looking for lower prices and are comfortable handling paperwork and inspections yourself. Be cautious of scams and ensure you obtain a vehicle history report.
• The Best Option Depends on You: Consider your budget, comfort with the buying process, and the importance of warranties and legal protections when deciding between a dealer and a private seller.

What Is A Private Seller?

A private seller is an individual who sells their personal vehicle directly to a buyer, without involving a dealership or third-party organization. These transactions are typically more informal and often take place through online marketplaces, classified ads, or word-of-mouth. Private sellers usually offer vehicles “as-is,” meaning there are no warranties or guarantees, and the buyer assumes full responsibility for inspecting the car and ensuring it’s in good condition. While buying from a private seller can result in lower prices due to the lack of dealership fees, it also requires more effort from the buyer, including handling paperwork, verifying the vehicle’s history, and arranging for an independent inspection.

The Differences Between Buying From A Dealership Vs. A Private Seller

Vehicle Options

Dealership: Looking for a brand new Honda Civic with all the bells and whistles? Or are you interested in a pre-owned Kia Forte with low mileage? When it comes to vehicle selection, dealerships have the upper hand. They sell both new and used vehicles and offer a wide variety of upgrades and add-ons so it’s easier to find the car of your dreams.
Private Seller: If you’re shopping privately, you’re shopping for a used car. While a used vehicle can be a great purchase, it can be hard to find a specific make and model if no one is selling what you’re looking for locally. If you find a car you like but it needs a new stereo system, you’ll have to make that upgrade on your own.

Price Differences

Dealership: Since dealerships sell new and pre-owned vehicles at a variety of price points, it’s easy to find a car that fits your budget. Dealers also offer customer incentives like cash-back rebates, low-interest financing options, and other perks that can save you money on the sticker price.
Private Seller: Someone selling their old vehicle is usually trying to make as much money as possible on the sale. To make sure you’re getting a good deal, check online classifieds or sites like Canadian Black Book to figure out what similar used vehicles are selling for. You can also use this information to back up your counter offer if you decide to try and haggle. Sometimes you can get away with negotiating a lower price, but it’s ultimately up to the seller.

Mechanical Condition

Dealership: Vehicle condition is a defining difference between dealers and private sellers. Shopping at a dealership means you can be confident that you’re buying a high-quality vehicle. New cars are covered by a manufacturer’s warranty, which means any defects or surprise issues that arise in the first few years of ownership will be fixed free of charge. Most dealerships also offer certified pre-owned vehicles that have an extended warranty and have been inspected, refurbished, and certified.
Private Seller: Buying privately can be riskier because you’re buying a vehicle “as-is.” It’s hard to know what you’re getting yourself into, mechanically-speaking, without a detailed accident history report or inspection. Even if you do get the car checked by a third-party mechanic, you could end up paying a pretty penny in repairs if something goes wrong later on. Beyond the condition, you should also check to see if the vehicle is listed as stolen or if there are any liens on it before you hand over the cash.

Payment Options

Dealership: Dealerships have a variety of payment options available to customers, including in-house financing and leasing. Choosing a payment plan through your dealership also means you can avoid the paperwork and hassle of bank financing. That said, it can be easier to secure a loan through the bank if you’re buying a car through a reputable dealership.
Private Seller: In a private sale you only have one payment option: cash up-front and in-full. It takes time to save up enough to afford a car — even a used one — and unless you have a large sum of money on hand you’ll probably need to secure auto financing to buy one. It can also be more difficult to secure financing through a bank for a pre-owned vehicle.

Protecting Yourself During Private Sales

Protecting yourself during private sales starts with thorough research and careful preparation. Always request a vehicle history report, such as a CARFAX, to check for past accidents, liens, or major repairs. Arrange for an independent mechanic to inspect the car before finalizing the purchase to ensure there are no hidden issues. Meet the seller in a safe, public location and verify their identity to avoid scams. When handling paperwork, ensure the ownership transfer is completed correctly, and double-check that the VIN matches the documents. Lastly, avoid paying in cash without a proper receipt and be cautious of deals that seem too good to be true. Taking these steps can help you minimize risks and make a secure purchase.

Financing Your Next Used Vehicle

Birchwood Automotive Group takes in-house financing a step further than the average dealership by offering flexible financing options and bad credit car loans through Birchwood Credit Solutions. We are the largest dealership in Manitoba and the only one that lends its own money — that means more selection, approvals and lower interest rates. Contact us today to learn more about our fast and easy online application process.