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Where’s the best place to buy a car?

From online car-buying services to auctions — you've got options.

Whether you’re buying the car of your dreams or one just to get you from point A to point B, it’s a huge financial decision — one that can serve you for many years at that. Comparing your options for where you buy your new set of wheels may be able to save you enough cash to mod your ride — or simply fill up the tank a few times.

Quick comparison of places to buy a car

DealershipOnlinePrivate sellerAuction
CostPotentially more expensivePotentially cheaperPotentially cheaperCheap
Speed of purchaseDepends how much you shop aroundCan be time-consumingCan be time-consumingVery fast
New cars availableYesYesNoNo
Used cars availableYesYesYesYes
Test drivesYesYesYesNo
Ease of purchaseEasyVaries — depends on the sellerVaries — depends on the sellerEasy

Find out more about each place of purchase

New car dealership Used car dealership Online Private seller Auction

Buying a new car from a dealership

If you want a shiny new set of wheels and that new car smell, you’ll probably visit local car dealerships. You’ll find dealerships for all major brands in cities and towns across the country — it’s just a matter of visiting your top choices to start test-driving models.

Peace of mind is the biggest advantage of buying new. A new car is just that, new — you won’t have to worry about parts being worn down, and it’s much less likely to develop issues as quickly as a used car. You also don’t need to worry about service records, previous body damage or any outstanding finance from the previous owner.

Unfortunately, buying a new car from a dealership also means paying a premium price. A car with all the latest features, a new-car warranty and any options you desire will mean you’re going to pay more than you would for a used vehicle.

Finally, buying face-to-face means dealing with sales staff. Car salespeople may not have the best reputation for honesty or integrity, so keep an eye out for the dodgy sales tactics some dealers use to prey on unwitting customers. You’ll also need to deal with the pressure of sales pitches at every dealership you visit.

  • Peace of mind. New cars are much more mechanically reliable than used cars and you don’t have to worry about their service or repair history.
  • New-car warranty. New cars purchased from dealerships come with the manufacturer’s warranty, which can provide financial protection against any mechanical problems for several years.
  • Latest features and options. New cars have better fuel economy, improved safety ratings and all the latest tech features. You also have the freedom to select any extra options you want.
  • Trade-ins. You can trade in your old vehicle when you buy your new one to shave down the cost.
  • Pressure to buy. You may have to deal with pushy salespeople and questionable sales tactics.
  • Expensive. Buying a new car from a dealership can leave a dent in your wallet.

Buying a used car from a dealership

A used car may not have the same level of glamor and excitement as a new vehicle, but buying used allows you to save thousands of dollars. You’ll also find plenty of well-maintained used cars that have been regularly serviced and treated with the utmost care throughout their lives, so it’s certainly possible to find excellent value for money.

The trouble is not all used cars have led trouble-free lives. Mechanical problems, poor servicing history and questionable repairs following previous accidents are just a few of the potential problems lurking just beneath the surface. Dealing with used car salespeople, who have a well-established reputation for dodgy sales tactics and questionable ethics, is another drawback.

  • Cheaper. It’s much more affordable to buy used than new.
  • Plenty of choices. There’s a huge range of choices available so you can find the right make and model.
  • Warranty. Dealer-sold certified used cars often come with a warranty if they’re under 10 years old and have less than 100,000 miles clocked.
  • Dodgy dealers. Used car salespeople aren’t always trustworthy.
  • Your car could come with baggage. From a poor servicing history to shoddy repairs following a previous accident or flooding, there may be more to your used car than meets the eye.
  • Older vehicles. Used cars usually can’t sport all the modern features of a new vehicle.

Buying a car online

Many people begin their search for a new car online. Websites like, Carvana and Kelley Blue Book let you browse thousands of new and used vehicles from private sellers and car dealerships.

The biggest advantage of buying a car online is that it’s extremely convenient — you can compare a wide range of vehicles and prices without having to get off the couch, and without feeling pressured to buy. Of course, you’ll still need to visit the seller to inspect the car and take a test drive, but shopping online can remove a lot of the legwork and hassle of comparing your options.

However, one of the problems with shopping online is the ad you see posted may not match the car for sale when you turn up to inspect it. There’s also no way of knowing whether private sellers that list their cars online are trustworthy, so it’s important to get an inspection done before you buy, check the car’s history and make sure there’s no finance owed on it.

  • Convenient. Car sale websites can help you compare an extensive range of makes and models without leaving your house.
  • Wide range of vehicles. You can compare the prices and features of thousands of new and used vehicles from private and commercial sellers all over the country.
  • No pressure to buy. When you browse cars online, you don’t have to deal with the inconvenience and hassle of fending off sales pitches from dealers.
  • Competitive prices. The online car sales marketplace is competitive, which means you can shop around for a good deal.
  • False listings. You can’t always trust the photos and details included in online car sales ads.
  • You don’t know who you’re dealing with. There are always risks involved when buying from private sellers, so it’s important to get the car inspected and make sure it’s not encumbered by finance.

Buying a car from a private seller

Not all private car sales take place online. You could see a car advertised in the classifieds section of your local paper, or maybe just marked on the side of the road with a for-sale sign on the windshield.

Buying privately potentially allows you to score a great deal. When you find a mechanically sound car with all the features you want, you can haggle all you want with the seller and try to negotiate the best possible price.

However, you’ll need to watch out for several traps and pitfalls. A clear title isn’t guaranteed, and you could potentially be buying a stolen car. You also won’t get a warranty, so having it inspected by a mechanic is critical before you buy.

  • Potential savings. You may be able to find the car you want at a bargain price.
  • Freedom to negotiate. You can haggle with the seller to try to lock in a better price. You may even be able to make a trade.
  • Don’t have to deal with dealers. Private sellers usually won’t apply the same pressure to buy as car dealers.
  • No warranty. You don’t get a certified used car warranty when you buy from a private seller.
  • Past problems. It’s important to check the vehicle you buy actually belongs to the person selling it and doesn’t have any faults, mechanical problems or unpaid debt attached to it.

Buying at auction

Buying a car at auction is the quickest method available, and can come with significant savings compared to buying from a dealer. Although auctions aren’t generally targeted toward private buyers, you can find a great deal if you know what you’re looking for.

You’ll typically get to inspect a vehicle before bidding, but test drives aren’t available. Some cars come with a limited warranty and others won’t — the auctioneer will announce this before bidding begins.

With this in mind, it’s important you research ahead of time and keep a cool head when bidding starts.

  • Cheap prices. You may be able to secure the car you want at a bargain price.
  • Visual inspection. You’re usually able to inspect the vehicle before bidding begins.
  • Fast. This is one of the quickest ways to buy a car.
  • No test drive. You’re not usually allowed to test drive a vehicle before bidding.
  • Can get caught up in excitement. It’s easy to get caught up in the excitement and emotion of an auction and pay more than you want.

Buying a demo car

One final option worth considering is buying a demo car. Demo models are usually vehicles that have been used as test-drive cars, but they can also be vehicles used by dealership employees or even used as loan cars.

Because demo cars can have thousands of miles on them, you can enjoy substantial savings compared to the cost of a new vehicle. And since they’re often used to show off the best a particular model has to offer, they commonly include a range of top-of-the-line features and extras.

Keep in mind you’re not buying a completely new vehicle, so checking the car’s history before you buy is crucial.

  • Big savings. You can save several thousands of dollars if you buy a demo model instead of a new vehicle.
  • Extras and options. Demo cars often feature a range of additional features and options.
  • Value for money. Well-looked-after demo models can provide great value for money.
  • Used car. You’re effectively buying a used vehicle, which means you may not enjoy the same peace of mind that comes with a new car.
  • History can vary. Make sure you’re aware of exactly how the demo model has been used before you buy.

Compare car loans

1 - 4 of 4
Name Product Filter Values Minimum credit score APR Loan term Requirements
PenFed Auto Loans
Starting at 5.19%
3 to 7 years
Active membership with PenFed
One of the largest national credit unions in the U.S., it offers new and used auto financing with transparent low rates.
Varies depending on the lender
3 to 6 years
Varies depending on the lender
5.69% (as low as)
1 to 6 years
18+ years old, US citizen or permanent resident
A car loan connection service for borrowers looking to refinance.
No minimum credit score
3.9% to 27.9%
1 to 6 years
18+ years old, annual income of $4,000+, no active bankruptcies
Get pre-qualified for used car financing and receive competitive, personalized rates.

3 tips for buying a car

No matter where you choose to buy a car, keep the following tips in mind to help you find the right vehicle at the right price:

  1. Compare your options. Compare features, inclusions and prices across a wide range of vehicles. Visiting an auto show can help you check out models from several manufacturers all at once — saving you time.
  2. Get an independent inspection. If you’re buying a used car, always get it inspected by a qualified mechanic. This can turn up any mechanical issues and help you decide if it’s the right car for you.
  3. Read the contract closely. Always read any contract closely before signing it so you know exactly what you’re getting.

Bottom line

If you’re willing to do your research and shop around, you can likely find a reliable car with all the right features, and without breaking the bank. To get the most out of your money, you can also compare financing options for cars.

Frequently asked questions

What kind of car auctions can I attend?

Government and some private auctions are open to the public. Check ahead of time if you’re unsure, since some private auctions are only open to licensed car dealers.

What’s the best time of year to buy a car?

The end of the month is usually the best time in general to buy a car, but for the best deals you should buy during the fall.

How can I calculate my monthly loan payment?

Use our monthly payment calculator by entering how much you want to borrow, your loan term and interest rate.

How can I avoid pushy salespeople at the dealership?

If you want to buy a car from a dealership, but hate the negotiation process, you might want to consider using a car-buying service. Car concierges and car brokers will shop for you and negotiate a deal on your behalf. You can learn more with our guide to car-buying services.

Picture: Getty Images

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