Dealer or private seller: pros, cons and traps of each

Neither is better by definition. Each protects you from something and exposes you to something else. Here is what changes.

Dealer and private purchases can differ in price, documentation and warranty terms. Compare the complete agreement and vehicle condition before deciding.

Quick comparison

Dealer traps

• The payment instead of the price. "How much do you want to pay per month?" turns an expensive car into an "affordable" one by stretching the term. Negotiate the total price of the car, then the financing.
• Add-on charges. Doc fee, "prep," "paint protection," "VIN etching," extended warranties. Ask which are optional. In Arkansas the dealer's service and handling (documentation) fee has a legal cap of $129, and that $129 cap covers used-car dealers and new-car dealers alike: the Arkansas State Police sets it by rule for used dealers (Ark. Code § 23-112-617, Service and Handling Fees Rules) and the Arkansas Motor Vehicle Commission sets it by rule for new dealers (Ark. Code § 23-112-317, Subpart 8 of its rules). Neither one can go above $129. If the dealer charges it, it must be charged the same to every retail customer, itemized separately on the buyer's order, and carry right next to it, in bold or otherwise conspicuous type, the notice the law requires: a service and handling fee is NOT an official fee, it is not required by law, and it may result in profit to the dealer. A dealer charging you to fill in the blanks on standardized forms or to prepare documents outside this fee is not allowed to do that.
• The yo-yo. They let you leave with the car "approved" and call days later: financing "didn't go through," you must re-sign at a higher rate. Sign nothing conditional; if financing is not closed, the car stays.
• Blended trade-in. They value your car high and raise the price of the new one, or the reverse. Negotiate both separately and in writing.
• "Certified" as a sales pitch. A factory certification has value; the dealer's own "certification" is worth whatever its contract says. Read what it covers.

Private-seller traps

• The curbstoner. Someone who buys cars at auction and sells them as if they were their own, without a license. Signs: the title is not in their name, they are selling several cars, they want to meet in a parking lot. Check whether the activity requires a license and verify the title and identity before paying.
• Title with a lien. The car has an outstanding loan. Confirm with the lender and title agency how the lien is recorded or released before paying.
• Open title. The seller hands you a title signed by a previous owner with the buyer left blank. An incomplete ownership chain can prevent the transfer; confirm the required documents before paying.
• The payment. Don't bring cash to a stranger. Close the transfer at the tax collector or a bank, with the title in hand.
• The solo test drive. For them it is a theft risk; for you, an uninsured car. Both ride along, with the owner's license and insurance current.

What does not change

In both cases: VIN checked, title reviewed, history on the VIN and an inspection by a mechanic you choose. The dealer gives you more paper; paper does not inspect the transmission.