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Buying a car online vs. at a dealership

More options to compare or more room to negotiate?

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Elizabeth Barry
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Used to be your only option to buy a car was walking into a dealership. Now you can also complete the whole process online. Dealerships still have the benefit of allowing you more space to negotiate both the price and terms of financing. But you’ll be able to browse more options if you shop online — including cars from private sellers.

Buying a car online vs. dealership

OnlineDealership
CostMSRP with the option for a discountMSRP with the option to negotiate it down
Turnaround timeA few minutes to an hourAt least an hour
Financing options
  • Used car loans
  • New car loans
  • Private party loans
  • Used car loans
  • New car loans
  • Buy-here pay-here loans
How it worksTest drive your car elsewhere and browse different sellers online. Call or email to request a price and follow the instructions to buy your car. You can have it delivered or pick it up from the seller.Compare cars at the dealership, test drive the car you’re interested in and negotiate with the salesperson. Drive it home that day or have it delivered.

Cost

Which option is cheaper really depends on your negotiating chops. At a dealership you can negotiate it down the traditional way. Online, you can get a discount by finding deal by coordinating with an online salesperson, who are often more likely to give you a quote right away and offer fixed discounts.

Turnaround time

It’s often faster to buy a car online. While you might be able to drive away the car from the dealership the same day, it typically takes at least an hour to get a deal.

Negotiating at a dealership is more of a performance and there can be a lot of back and forth between the salesperson and their manager. That’s less the case with an online salespeople.

Financing options

When you buy a car from a private party, like Craigslist, it opens you up to private party financing from a lender. But by-here pay-here dealers for bad credit borrowers are more common at dealerships. Both are generally more expensive than both car loan options.

How it works

The one drawback of getting a car online is that you don’t get to take the car for a test drive — you’ll have to do that before. When you visit the dealership, you can test drive the car there. However, you’ll have less hassle negotiating with a dealership.

Depending on who you buy from online, you can pick up the car at the sellers’ discretion or have it delivered to your home. Through a dealership, you could potentially drive it home that day.

The 10 best car-buying apps of 2021

Should I buy a car online or at a dealership?

The biggest difference between buying a car online versus going to the dealership is the shopping experience. You still need to test drive the car and negotiate your price.

When to buy online

Buying your next car at a dealership may be efficient and let you ask all your questions, but you could get a better deal if you’ve done your research before showing up. First, shop cars online to:

  • Compare prices. Look for cars of same make, model and year you’re looking for to compare prices online. This could give you more bargaining power at the dealership.
  • Research. Find out how much it usually costs to buy the car you want, considering insurance, registration and taxes. Then learn what to look for in a used car or how to pay less for a new car.
  • Filter your search. Narrow down your search by selecting a specific color, price range, number of miles and brand.
  • Find more options. When buying from a dealership, your choices are limited to whatever is available on that lot. You have more choices when you go online and will still be able to view the car in person before you buy.

When to visit a dealership

If you don’t like online research or would prefer to talk to someone about your options, making a trip to a car dealership or two can help you compare your options. By going to a dealer you could benefit by

  • Knowing the prices. An Internet search may only return average prices for the vehicle you’re interested in if it’s not available online. By visiting a dealership, you can see the actual sticker price of the vehicle along with its features.
  • Talking to an expert. Salespeople know their business should be able to help you find a vehicle in their inventory that suits your needs.
  • Comparing two or more dealers. Although it might take more time, you’ll be better served to see the prices offered by a handful of dealers for equivalent vehicles.
  • Test drive different options. Visiting a dealer means you can test-drive your options and find a car that’s comfortable for you.

In addition to shopping at a dealership, you’ll be able to start building a relationship. If you plan on buying multiple cars, having a dealership you trust with people you can count on can help you get better deals in the years to come.

When both make sense

The differences between shopping for a car online versus in-person balance out. You may find the best option is using both methods: Take the time to compare cars and financing online, then visit a dealership with an exact plan to face a sales pitches with confidence.

How to get an email quote from a dealership

If you want the ease of shopping online but still want to work with a dealership, you can email the sales team at your local dealership for a quote. And if you’re already preapproved for a car loan, mention that as well. It can get the ball rolling on negotiations if you’re interested in financing through the dealership.

Your email doesn’t have to be extensive. Simply provide a little bit of information to get started:

  • The car you want along with its year, make and model
  • Any options or features you want included
  • A request for information about current incentives, rebates or lease deals
  • The date you plan on buying your car

One of the major benefits of email is the ease of communication. You can send one to each dealership you’re interested in — allowing you to quickly compare offers and find a deal with pursuing.

Online financing vs. dealership financing

Getting a loan through a dealership involves less work but you can typically get your funding in less time.

How to finance online

The trick to making a great deal with online financing is to get preapproval for a car loan. With preapproval in your pocket, you can simply tell the dealer that you have a better loan offer and ask if it’s willing to match the terms.

Before you start on the preapproval process, you’ll want to know what type of car you’re interested in and be prepared to submit multiple online applications to different lenders.

Also, consider researching car loans vs. personal loans. Each offers its own benefits and, much like qualifying for preapproval, are useful when you’re ready to buy a car.

Compare online car loans

How to finance with a dealer

Dealership financing is convenient, but that doesn’t mean you’ll be getting the best deal. In fact, there is often a big price gap between dealer financing and car loans. That’s because dealers are more like loan brokers — they go through a bank and then mark up the interest rate to make a profit.

A good way to get a bargain with dealership financing is to bring your other loan offers to the negotiating table. If you’re able to show that another lender is willing to offer you a lower interest rate with better terms, you’ll have the upper hand. If the salesperson wants to finance your car, they’ll either need to match the price or offer you a lower rate.

In many cases, especially if you don’t have the best credit, dealership financing won’t be your best option.

Compare a range of car loans to apply for online

Data updated regularly
Name Product Filter Values Minimum credit score APR Loan term Requirements
PenFed Auto Loans
PenFed Auto Loans
Varies
Starting at 1.79%
3 to 7 years
Active membership with PenFed
Low APR car loans from a well-known credit union.
Go to site
More Info
Carvana
Carvana
No minimum credit score
3.9% to 27.9%
Varies
18+ years old, annual income of $4,000+, no active bankruptcies
Get pre-qualified for used car financing and receive competitive, personalized rates.
Go to site
More Info
car.Loan.com Car Loans
car.Loan.com Car Loans
300
Varies by network lender
Varies by lender
Must be a US citizen with a current US address and employed full-time or have guaranteed fixed income.
Apply with a simple online application to get paired with a local auto lender. No credit and bad credit accepted.
Go to site
More Info
CarsDirect auto loans
CarsDirect auto loans
No minimum credit score
Varies by network lender
Varies by network lender
Must provide proof of income, proof of residence, and proof of insurance.
Save time and effort with this lending service specializing in beginner-friendly or subprime car loan.
Go to site
More Info
Auto Credit Express Car Loans
Auto Credit Express Car Loans
300
Varies
Varies
Must be employed full-time or have guaranteed fixed income of at least $1,500/month and be a current resident of the US or Canada.
Get connected with an auto lender near you, even if you have bad credit.
Go to site
More Info
Monevo Auto Loans
Monevo Auto Loans
500
3.99% to 35.99%
3 months to 12 years
Credit score of 500+, legal US resident and ages 18+.
Quickly compare multiple online lenders with competitive rates depending on your credit.
Go to site
More Info
LendingTree
LendingTree
Good to excellent credit
Starting at 0.99%
Varies by lender
18+ years old, good to excellent credit, US citizen
Compare multiple financing options for auto refinance, new car purchase, used car purchase and lease buy out.
More Info
myAutoloan.com Car Loans
myAutoloan.com Car Loans
550
Starting at 1.89%
550+ credit score, no open bankruptcies, $24,000+ annual income, US citizen or permanent resident, 18+ years old
Get up to four offers in minutes through one simple application. Multiple financing types available including new cars, used cars and refinancing.
Go to site
More Info
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Compare up to 4 providers

Where can I buy a car online?

The benefits of shopping online can vary based on the website you’re using. Each one is different, and one might suit your needs more than another. Some sites you can visit to start your comparisons are:

  • TrueCar. TrueCar lists prices others have paid for similar cars so customers know you’re getting a fair price for your next vehicle.
  • Cars.com. Cars.com works with thousands of dealers to give you an easy way to find the car you want when you’re ready.
  • Carvana. Carvana not only allows users to inspect the car with a photo model, but also have access to a free history report before you buy.
  • Craigslist. You can find cars from private party sellers by shopping around on online forums.
  • Edmunds. In addition to side-by-side comparisons and quotes from dealers and on used cars, you can also get car buying tips and advice through this website.
  • Kelley Blue Book. Kelley Blue Book is also a great resource to get a quote on your current car when you want to trade it in and get price quotes from dealers and on used cars.
  • MSN Auto. Formerly known as Carpoint, MSN Auto allows you to compare cars from multiple sources before you buy.

Plenty of other websites are geared to help you buy a new or used car. Buy directly from a brand’s website or visit sites like eBay to find private sales. Take your time browsing online offers to find the best deal around.

Benefits and drawbacks of each option

BenefitsDrawbacks
Online
  • Take your time. Do your research at your own pace without the pressure of a dealership trying to get you to buy.
  • Compare prices. Get prequalified or preapproved for multiple offers on the same make and model. This saves time if you do decide to vist a dealership.
  • Avoid professional hagglers. Most people online aren’t professional salespeople and aren’t after a huge profit.
  • It takes longer. You’ll have to message back and forth with the seller and set a meeting time, which could take days or weeks.
  • No background checks. Most online sellers don’t go out of their way to make sure the car is functional. You’ll have to visit a mechanic yourself to ensure you aren’t buying a lemon.
  • Comparisons may not be accurate. It’s hard to tell what condition a car is in based on a picture and short description.
Dealership
  • Extra features. Dealers often offer a wide range of extra features that you can have installed on the lot.
  • Quick answers. Car salespeople are experts in their business and can answer most questions immediately.
  • Special financing offers. Depending on the time of year, dealerships might offer special cashback deals or rebates — especially when car-shopping during the summer.
  • Overpriced and unnecessary options. Dealership extras could be unnecessary or a lot cheaper to get elsewhere.
  • Limited time to compare. A salesperson wants to make a sale as quickly as possible. If you haven’t done your research ahead of time, you may feel pressured to make a decision before you’re ready.
  • High-pressure sales. If you can’t handle sales tactics, you might walk away with something you don’t want.

Buying a car at a dealership? Watch out for extra costs

  • Vehicle preparation fee. Dealerships charge this fee to cover the cost of getting your car ready for delivery. You might not have to pay it, unless they’re going beyond a standard car wash.
  • Documentation fee. Most dealers charge this fee to cover the cost of processing the paperwork that comes with your new car. Depending on your home state, you might pay a flat $100 fee or a price set by the dealership, which you can negotiate.
  • Unnecessary accessories and extended warranties. Didn’t ask for that sound system or paint sealant? See an extra-long warranty in your contract? Unless you actually want it, tell your dealer that won’t pay for it.

Bottom line

There are benefits buying your car online or at a dealership. The easiest way to find a good deal is to compare both and keep your options open. Trying to find a median between the two should help negate some of the drawbacks.

Looking for a place to start? Read over our guide to car loans. to equip yourself with the knowledge you need to find the right financing.

Frequently asked questions

How do car loan brokers work?

An online car broker connects you to a lender that matches your loan criteria. Brokers act for you: You’ll only have to fill out a loan application once, and you won’t have to deal with lenders directly until you’re ready to sign the loan contract.

What’s the best way to budget for car expenses?

Most car buying guides suggest you spend no more than 10% to 15% of your annual income on your vehicles, including the loan payment, regular costs and maintenance.

Image source: Shutterstock

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