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Find out if driving to the dealership or surfing the web is right for you.
Part of buying a new car is deciding where to shop. Though many resign to visiting a dealership to work with salespeople and test drive potential cars, online car marketplaces are another popular way to buy your next car. Both have benefits and drawbacks, and depending on your buying style, you might find one that works better for you.
Buying a car online vs. 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.
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. By going online first, you’ll be able 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.
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.
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. 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. Even if you do some shopping online, it doesn’t mean you know what you want. Visiting a dealer means you can test drive your options and determine 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.
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.
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. Here are some sites you can visit to start your comparisons.
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.
There are plenty of other websites geared to help you buy a new or used cars. You can buy directly from a brand’s website or visit sites like eBay and Craigslist to find private sales. Take your time browsing online offers so you can find the best deal around.
Online financing vs. dealership financing
Getting a loan through a dealership involves less work but you can typically get your funding in less time.
The trick to making a great deal with online financing is getting preapproved 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.
You may also want to consider looking into the differences between car loans and personal loans. Each offers its own benefits and, much like qualifying for preapproval, can be brought to the dealer when you’re ready to buy a car. This can be useful if dealer financing doesn’t include taxes or extra insurance you may need to cover your new car.
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. This is because dealers are more like loan brokers — they go through a bank and then mark up the interest rate so they can 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 a 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 you can apply for online
Updated April 20th, 2019
Benefits and drawbacks of each option
Benefits
Drawbacks
Online
Take your time. You can do your research at your own pace without the pressure of a dealership trying to get you to buy.
Compare prices. You can 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 make sure 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.
Dealership financing. Dealers have financing options that you can apply for when you get your car.
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.
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
Yes, but if you need it shipped to you, you’ll likely have to pay an extra fee. You may also not be able to test drive it, so unless you’re positive this is the car you want and can’t find similar terms anywhere else, it might be better to shop locally.
An online car broker will connect with you a lender that matches your loan criteria. By adding in the middle man, you’ll only have to fill out one loan application, and you won’t have to deal with lenders directly until you’re ready to sign the loan contract.
If you’re itching to ask some important questions in person, weekday afternoons are usually a good time to visit.
It depends entirely on your financial situation, but 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.
Elizabeth Barry is Finder's global fintech editor. She has written about finance for over five years and has been featured in a range of publications and media including Seven News, the ABC, Mamamia, Dynamic Business and Financy. Elizabeth has a Bachelor of Communications and a Master of Creative Writing from the University of Technology Sydney. In 2017, she received the Highly Commended award for Best New Journalist at The Lizzies. Elizabeth has found writing about innovations in financial services to be her passion (which has surprised no one more than herself).
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