Once you’ve done your research and decided what your first car will be you’ll need to start looking for where you’re going to buy. There are plenty of online directories where you can see what’s out there and decide what you want to follow up on. But will you try everything or narrow it down?

Obviously, if you’re buying a new car it will have to be from a dealership, but for second-hand cars, you have a choice. You can check out cars with both dealerships and private sellers, but the considerations between the vehicles will be so different that it’s rather difficult to compare. If you can choose between a dealership and private sale in advance, based on what you want and are willing to spend, you’ll be able to test drive more cars that are worth considering.

Both avenues have their pros and cons, so we’ve narrowed them down to the most important ones to help you make a decision.

Car Dealership Pros

Reviews. A quick online search will bring up a dealership’s customer reviews on sites like TrueLocal. So you can avoid the dealerships with a reputation for dodgy cars or ripping people off.

Haggle the price. Dealerships have to make a sale fast to keep stock moving. If you’ve done your research and know what the vehicle is worth, you can stand your ground and possibly save thousands off the original price. A pre-approved loan can help with this as the ability to buy “today” can get the price down quite a bit.

Extras. If you’re good at haggling or you can see they aren’t budging on their price you can sometimes get some extras thrown in. Consider extended warranty, different seats, sunroofs etc.

Rebates. Do your research! There are sometimes hidden manufacturer rebates on certain car brands and models.

Car Warranty: Car yards will usually have some form of warranty, which is a promise that the car won’t fall apart after you drive away.

Car Dealership Cons

Price markup. Car dealerships have to mark-up the price of their cars to cover the cost of rent, wages and advertising. A dealership car will almost always be more expensive than a private sale.

Dealership finance: It is best to avoid dealership finance altogether. It won’t be the best provider for you, it will be from the provider that makes the most promises to them. You can organise a pre-approved loan elsewhere before you shop to avoid this trap.

Private Car Sales Pros

Cheaper. A private sale will almost always work out cheaper than that of a dealership. Private sellers have almost no overhead costs so all they need to get back is the value of the car. They won’t have finance options like a dealership does, but you can still get a private sale car loan.

Eager to sell. Your low offer may get turned down at a dealership as they know someone will eventually come along that’s willing to pay their price. A private seller is usually in a hurry to sell so they can buy their next vehicle.

Haggling. Because private sellers are keen to sell in a hurry you’ll often be able to get the price down lower. A dealership may not budge on their price but a private sale price is almost always negotiable. Make an offer!

Private Car Sales Cons

No reputation. Because private car sales are usually a one-off, there is no customer feedback. Your first impression is all you really have.

Multiple locations. Car dealerships are often all in the one suburb or even on the one main strip. Checking out multiple private car sales could see you travelling all over town, emphasising how badly you need a car.

No warranty. Buying from a private seller can be a bit of a gamble. Once you own the car anything that goes wrong falls on you, even if it was their fault. With private sales, you really should get a qualified mechanic to check the car before you agree to anything.

Paperwork. Dealerships handle the transfer of ownership paperwork for you, whereas you’re responsible for it with a private sale.

Once you know where you want to shop you can check out what’s available and start planning a day for test driving.

Read Part 3: A Beginners Guide to Car shopping: Test Driving