Why Buy a Used Car from a Dealer

We have all heard and read about this before, buying a used car has always been a grey area for some. Whether or not to buy a used car privately, from a dealer or even at auction? Obviously each choice comes with its pros and cons but I will present the facts as we see them on each of these options and let you be the judge.

Buying Privately – what to expect and what you get.

Many of us, this author included, may have bought a vehicle privately at some stage, especially those of us that are older when private sales were probably the preferred method. Twenty or more years ago the reputation of used car dealers and especially the used car salesman was fraught with a negative perception so many of us bought privately.

OK so let’s make a list of all the things you need to organise. Depending if you have an old car to get rid of first, do you sell your car first or after buying a new one? Finance is a big factor, how much will be required after selling your car and how much will you need to borrow.

After searching the usual online sites or newspaper ads you may find the car you want is through a private seller. Some of us even prefer to buy used cars in this way because of that negative perception that still lingers.

To some it seems much more comfortable to talk to the owner of the car and find out about its history and take it for a drive. If you hit it off with the seller you’re more likely to perceive they are being honest. You can always haggle is you discovered a couple of small defects like paint chips or the indicator not working or those worn tyres that need replacement soon. And then you think you’ve got a great deal because they agreed to take off $300.

So when you finally get down to the offer do you agree on a price on the new one or do the responsible think and consider an inspection (at a cost of $300) to have peace of mind.

Doing this will probably require putting down a deposit with a time factor and then organizing the inspector and revisiting to make a final offer. Is all that worth it or should you trust the seller and buy it now?

Depending on if you have a current car to sell, either way you most likely won’t have enough funds to buy the new one. This means you have to organise a car loan and contact a finance company. Will this be your bank, a credit company or should you get a personal loan? The approval time will also take up to a week especially if you are going through a bank.

Let’s look at the hassle of selling your car privately.

Selling the old car is usually a must so you do it before or after buying your new car?  Most of us probably need the proceeds to help finance the new one. This means you also need transport when looking for a new car and that means you become dependent on friends or family to look for a new one unless you time the buy and sell perfectly on the same day.  

This time you become the seller and will probably need to place an ad on a popular 3rd party car listing website, maybe put an ad in Gumtree or the Trading Post as well. That’s just cost you about $130. Once that’s done all you have to do is wait.

A week may go by and you get a few calls and perhaps one or two appointments. But will the potential buyers arrive or bother to tell you if they don’t? This takes up your time and some patience and could likely go on for weeks until finding a buyer.

When a prospective buyer does turn up they may want an inspection, this is more delay and will potentially lead to you obligated to give a large discount on the old car if defects are found and worse still the buyer may just walk away.

Private Sale Conclusion

Does this all sound familiar to those of us who have bought and sold privately? Let’s be honest, it’s a nightmare because you most likely need to sell privately as well so both processes can be time consuming and frustrating. You have to do all this yourself and there’s a lot to do and organise over what could be weeks.

There’s no comeback once you hand over the money to a private seller. No warranty, no history check on the finance unless you pay a lot of money to do all this yourself. Of course it could all go fine, you may find it much easier to negotiate a price you want with a private party, especially if they have a pressing need to sell.

Buying from a Dealer

Times have changed - these days we have real facts about what used car dealers can and can’t do and our rights as consumers. For one dealers must be members of the Motor Trades Association and follow a strict set of rules and guidelines. On the down side buying from a dealer is usually more expensive than buying privately but there’s good reason for this.

Contrary to popular belief when you walk in to a used car dealership like Northpoint Toyota, you won’t be confronted with a salesman swooping in on you with statements like “what do I have to do to get you into this car today”. For the larger reputable dealerships sales consultants have undergone a lot of training especially in etiquette and guest experience.  

Advice – how to find a dealer

Make sure the dealer is a part of a larger reputable company with the backing of an OEM brand. Such dealers are overwhelmingly trustworthy because their brand & reputation is on the line and they want your experience to be happy and memorable so you become an ambassador and tell others of the great, hassle-free experience. They usually sell multiple brands not just the brand they are affiliated with.

When you use a 3rd party online car search website you may get the advantage of a huge choice of cars but won’t know who the dealer is until you make an enquiry. This can be hit and miss and you may end up making multiple enquiries until you find the right convenient dealership.

It’s best to look for a dealer that’s convenient for you and you are aware of their brand and reputation. So search by location and work out a budget and a time frame – don’t rush in and think you have to buy a car on one specific day.

Best to Google their name for something like “Used Cars Prospect” (i.e. your suburb) and find a result like this.

The result may look like this – Which dealer do you think has the better reputation?

Dealer Search

Go to the dealer’s website which should provide more information about their vehicles and their specials and of course compare dealer websites if there are more than one to choose from close to your location.

The following is a list on the pros and cons of buying from a dealer:

Dealer - Pros

  • Dealers must provide a warranty or honor statuary warranties so ask about these
     
  • Dealers have a Motor trader license that has strict rules and must abide by guidelines that protect the consumer
     
  • Must ensure the vehicle has no outstanding money owing
     
  • Usually perform their own inspections and re-conditioning before sale
     
  • Provide information about the vehicle, price, Kms travelled and previous owner
     
  • Will in most cases negotiate on price
     
  • Offer other incentives like exchanging a car if you are not happy with the original choice
    -   Note: Only Northpoint currently offer a 7 Day Exchange in Adelaide
     
  • Offer flexible finance options so you don’t need to shop around – these are usually competitive and beat Bank
    and Credit Union rates
     
  • After sales service – they will fix up any defects found for 3 months or 5000 Kms and offer professional servicing
    probably with an incentive
     
  • Toyota offers peace of mind with the Certified Used Vehicles on selected Toyota used cars
     
  • Toyota used vehicles usually have a documented service history
     
  • Sales Consultants undergo training in customer experience and vehicle knowledge and are reviewed by you the
    customer on their performance
     
  • Large selection of vehicles sometimes across many locations
     
  • Can source a vehicle for you when they are not in stock
     
  • A Dealer offers a choice of cars all in one or many locations, and in many cases will bring the car to your home
    or office for a test drive even to keep for a weekend
     
  • Many large dealers contribute to their local community through sponsorship, be it the local football and schools
    as well as environmental causes etc.
     
  •  Contrary to popular belief, most dealers will pay top dollar for your trade vehicle if the vehicle is in good condition.

Dealer - Cons

  • Vehicles are usually more expensive as dealers need to build in a warranty period, pay for reconditioning and of course have some margin on the price they paid for the car – after all it’s a business
     
  • Finance options are usually not as broad because of affiliation with a finance company
     
  • You may get distracted by special deals and lose sight of your bigger picture
     
  • You may get less for your trade-in than private sale
     
  • Smaller independent car yards may not have the resources or experience and longevity of the larger brand affiliated dealerships.

Car Auctions

Like car markets or brokers, car auctions simply bring together many sellers into one place or bring sellers to you for convenience. You bid against other buyers on each vehicle until the highest bid wins.

Unfortunately at auction you only get to visually inspect the vehicle. You can’t start the engine or take it for a drive, there is no inspection report or any information on its history other than last owner and Kms travelled. Many used taxis are sold via this method. Sometime you may be lucky and find a bargain on a repossessed vehicle being sold by a finance company but wholesaling professionals will know these cars and most likely bid higher to purchase them for resale. As a seller you have no idea what your car may be sold for and it may be passed in leaving out of pocket for the auction fees.

Conclusion

Times have changed. Buying a used car from a reputable dealer is clearly the best decision to make with peace of mind in knowing you are covered for any problems and will in most cases receive a great experience.

Northpoint provide many advantages when buying a used vehicle. We offer a new way of buying – it’s called The Northpoint Way – please take a look at all the advantages that come with buying a car from Northpoint.

We also are one of the only dealers to be fully transparent and provide individual profiles on each of our sales consultants which include testimonials and rating scores set by you our guests.

 

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Addendum

Licensed Used Car Dealers must offer the following

Ethics - dealers are usually members of the Motor Trades Association in their state. Member dealers have a strict code of ethics that they operate within their business. 

Warranty – When you buy from a dealer, statutory warranty will apply from the date of purchase. If the car costs between $3001 and $6000 it will be covered for the first 3000km travelled or two months, whichever occurs first. If the vehicle costs more than $6000, it will be covered for the first 5000km travelled or three months, whichever occurs first.

Cooling-off period – When buying from a dealer, you're entitled to a two day cooling-off period. The dealer may ask for up to a 10% deposit and if you decide to pull out of the purchase within the cooling-off period they are entitled to keep the non-refundable part of your deposit ($100 or 2%, whichever is less).

 
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