If you're interested in buying a used car, you've probably considered some vehicles from dealers and others from private sellers. So which is better? We've outlined some pros and cons of each choice to help you make up your mind.

Vehicle History

When it comes to vehicle history, a private seller likely has more information than a dealer. After all, dealers can go through hundreds or thousands of cars per year, while a private seller likely knows the ins and outs of his or her vehicle, having owned it for some time. Admittedly, vehicle history reports from CARFAX and AutoCheck can give you some history on a dealer's car, but few things match buying a vehicle from a private seller who can thoroughly describe its condition. Of course, it's up to you to decide how much to trust a private seller, but having some background information is certainly a benefit.

Financing

If you've tried to finance a used car, you'll know that it's not as easy as financing a new car. Interest rates are higher, and some banks won't finance vehicles past a certain age or a certain mileage limit.

Some banks also won't finance vehicles through private sellers. That's because many banks are concerned that a private seller won't adequately describe a car's condition, given that the seller doesn't have his or her reputation on the line. If a buyer finances a car that turns out to have serious problems, he or she could walk away from the loan, leaving the bank with a worthless car. Some banks are also worried about potential fraud with private sellers, meaning they will only deal with reputable dealers.

Taxes

Depending on where you live, taxes can be a benefit for either private sellers or dealers. In some states, no sales tax is assessed on private vehicle sales, and that means buying from a private seller can save you thousands of dollars. In other states, sales tax is only assessed on the difference between your trade-in and the purchase price of a new car. In that case, buying from a dealer can save you thousands of dollars. When it comes to taxes, it's best to check your local laws.

Purchase Price

If you're looking for the best possible purchase price, you're likely to find it from a private seller rather than a dealer. The reason is simple: While a dealer needs to make a profit on each vehicle, a private seller doesn't have the same concern. Instead, private sellers are usually trying to sell an old vehicle so they can buy a new one, and that means they're often more willing to negotiate just to ensure that the car is sold quickly.

Reputation

One important thing to think about when buying a used car is that a dealer has a reputation at stake with each sale. Think about it: If a dealer sells a flawed car without disclosing its problems, the dealer risks creating an angry buyer who could damage the dealer's reputation. A private seller doesn't have the same concerns, since he or she isn't actively engaged in the car sales business. As a result, good dealers will likely go out of their way to solve problems that arise after the sale, while many sellers will likely avoid them.

Our Take

When looking for a used car, there are many potential benefits and drawbacks to buying from a private seller. We suggest that you carefully consider the ones we've outlined as you search for your next vehicle.

author photo

Doug DeMuro has a wide range of automotive industry experience, from work at a Ferrari dealership to a manager for Porsche North America. A lifelong car enthusiast, Doug's eclectic vehicle purchases include a Porsche 911 Turbo, an E63 AMG wagon, an old Range Rover and a Mercedes Benz G-wagen.

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