Used car buying - does who or where you buy from matter?

When buying a new car, your options are to head to an authorised dealer, or to a parallel importer that sells the model that you are interested in. However, if you are in the market for a used car, it gets a little more complicated as there are more than two options here.

If you have been browsing used car listings, you probably would have noticed listings by used car dealerships, consignment dealerships, and owners who are trying to sell their personal car. For those new to the process of buying a used car, it might get a little confusing - which option should you go for, and what difference would it make?

Fret not, we are here to break it down for you.

Used car dealers would spruce the cars up before selling, so the cars are likely to be in good condition

Buying from used car dealerships

Buying from used car dealerships come with various benefits. As the dealerships are taking on a risk when procuring their inventories, there's a greater emphasis on the quality of cars - a dealership would actively avoid buying in a lemon that could cost them too much to repair before the car could be put up for sale. The Lemon Law also applies when you purchase from a car dealer, so this further encourages the dealers to ensure the quality of their cars.

Buying from a car dealer can be a double-edged sword: The money spent fixing up the car and to keep the business running could result in higher prices of the cars being sold

But there are of course some downsides when purchasing from a dealership - like all businesses, they have overheads and other costs to account for, which add to the price of the car. The money spent on purchasing and refurbishing their inventory also means there's a defined price floor (independent owners selling their own car could be more flexible with price).

However, better quality cars isn't the only benefit here. When you buy from a car dealer, it would also be able to handle all the administrative matters (including loan application, ownership transfer, insurance, etc) for you, allowing a smooth and hassle-free process. That said, you still have to make sure that you choose a reputable car dealer to buy a car from, but if you are a newbie, buying from a used car dealer would probably be the most convenient option.

Pros:

• Accountability 
• Lemon Law applies
• Potentially better quality of vehicles as cars for sale are typically repaired or refreshed
• Professional guidance throughout the purchase process

Cons:

• Higher price
• Higher sales pressure (salesperson might be pressured to sell and be a little pushy)

Buying a used car directly from the owner could result in a better price as there isn't any middleman involved with the deal

Buying directly from car owners

You probably would have heard that you should always seek out direct owner-sellers to purchase a car from - by cutting out a middleman, there's potential savings to be had.

While it is true that you could save on the middleman fee, there are some downsides to buying a car directly from the owner. Unlike car dealers, it is unlikely for the owner to refurbish their car before trying to sell it. However, this could also be a good thing as you would be able to see the car as-is, and repair or refurbish as you deem fit with the money that has been saved when buying directly from the seller.

But buying directly from a seller, especially one that isn't experienced with the process, could mean that you'd have to muddle through all the administrative procedures. Transferring the ownership of the car is simple enough through the One Motoring website. However, you will also have to figure out the process to apply a loan if you need one.

As the owner isn't a business, Lemon Law wouldn't apply to the purchase, hence you could be in for a headache if there turns out to be major issues with the car.

Pros:

• Potentially lower price
• Price is likely to be more flexible
• View the car as-is (less surprises when it comes to actual condition of the car)
• Owner is likely familiar with the condition of the car (you can potentially find out more from the owner)

Cons:

• Lemon Law does not apply
• You would have to navigate through the administrative process yourself, such as applying for a loan

A consignment dealer functions somewhat like property agents - they don't own the car they sell, but would instead facilitate the sale by helping car owners to advertise their cars and assist in the transaction for a fee

Buying through a consignment dealer

Buying from a consignment dealer offers a mix of pros and cons from the other two options. A consignment dealer does not buy vehicles to sell. Instead, they function in a manner that's somewhat like property agents.

Consignment dealers would help car owners to advertise their cars and assist in the transaction to offer a smooth and easy experience for both the seller and buyer. In return, the consignment dealer would get a cut from the sale of the car.

Like buying directly from a car owner, you won't be protected by lemon law when you buy from a consignment dealer, hence you might want to get the car checked out before committing

The benefits of buying from a consignment dealer is that you'll get to enjoy similar levels of convenience as purchasing from a car dealer, but at a potentially lower cost. The downside is that Lemon Law does not protect you when you purchase from a consignment dealer, and the car is also sold as-is, much like buying directly from an owner, hence you might want to get the car checked out.

However, most consignment arrangements are structured such that the actual buyer and seller would never meet during the car viewing process (to avoid the dealer being cut out of the deal). As a result, you would have to find out all about the car from the consignment dealer, who might not be familiar with the car.

If you are someone that is familiar with all the administrative processes, and buying the car without the need for a loan, you might want to buy direct from an owner to avoid paying the extra fees to a consignment dealer.

Pros:

• Potentially lower price than buying from dealerships, but higher than directly from owners
• Enjoy the convenience and support akin to purchasing from a used car dealership

Cons:

• Lemon Law does not apply
• Not worth the fees if you are fine with navigating through the administrative processes of purchasing a car yourself
• Dealer might not be as familiar with the car

As each option comes with their own pros and cons, there isn't a hard and fast rule on who to buy a car from. So, does who you buy from matter? It definitely does, as the process and price that you could purchase the car for would differ. But at the end of the day, who you end up buying a car from could all boil down to who has the particular car that caught your eye.

If you want to ensure a smooth car-buying experience, you can also opt for Sgcarmart's BuySafe program where we represent you to purchase your desired car from dealers. You can find out more here.