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. Texas sets no dollar cap. The law only requires the documentary fee to be "reasonable", charged equally to cash and credit buyers, stated by amount in the buyer's order and in the contract, and shown next to that amount with this notice: "A DOCUMENTARY FEE IS NOT AN OFFICIAL FEE. A DOCUMENTARY FEE IS NOT REQUIRED BY LAW, BUT MAY BE CHARGED TO BUYERS FOR HANDLING DOCUMENTS RELATING TO THE SALE. A DOCUMENTARY FEE MAY NOT EXCEED A REASONABLE AMOUNT AGREED TO BY THE PARTIES. THIS NOTICE IS REQUIRED BY LAW." (Tex. Fin. Code § 348.006(c)). The dealer must also post that notice visibly in each place where a sale is finalized and — this matters if you were served in Spanish — if the language primarily used in the oral sales presentation is not the language of the contract, it must hand you the notice in writing in the language they spoke to you (§ 348.006(d)). Amount: TxDMV’s published dealer manual describes $225 for motor-vehicle sales financed under Finance Code Chapter 348 and requires a cost analysis demonstrating reasonableness before a higher fee is charged (citing 7 Tex. Admin. Code §84.205). Filing alone does not make a higher fee reasonable or otherwise lawful; the applicable notice, cost and reasonableness requirements must also be met. Confirm the rule that applies to your transaction with OCCC. Two things worth knowing: as a prospective buyer you can ask the OCCC whether the dealer filed notice of an increased fee and for how much, by giving them your buyer's order or a draft contract (§ 348.006(e-3)(2)); and this section by itself gives you no right to sue (§ 348.006(g)(1)). Negotiate it as part of the price.
• 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.