Buying a car: private vs dealership

After budgeting for weeks, making a list of needs, and searching for the perfect car, buyers are left with the toughest choice of all: buying through a dealership, or going private.

While many go the dealership route, for convenience, the private trade is booming, states Charles Grassie, MD at Surf4Cars.

On average, the WesBank Classifieds site, powered by Surf4Cars, has 8,000 private vehicles listed for sale at any given time. Private sellers can sometimes offer the best deal of all, as there are no business costs involved and some may have no intention to make a huge profit, according to Grassie.

Those looking to buy or sell their vehicle without the services of a dealership need to remain aware of a number of important checklist items.

“Using dealerships for a good pre-owned deal takes a lot of the admin out of the equation, but it does add costs – dealerships want their pound of flesh, too,” said Grassie. “For those who are willing to do a bit of paperwork themselves, buying or selling a car privately has some tangible financial benefits.”

First and foremost is the payment arrangement, in cases where the seller still owes the financing bank money for their vehicle. For example, if a seller advertises a vehicle at R150,000, but owes the bank R100,000, the latter amount needs to be settled.

“The best way to do this is for buyers to settle the amount directly with the finance house,” said Grassie. “The remainder of the selling price can then be paid over to the seller. This avoids a situation where sellers take receipt of the full amount and do not settle the outstanding amount with the finance house.”

In cases where buyers choose to finance the sale, the finance house will handle payment to ensure both the previous bank and buyer are paid.

Once the transaction has been concluded buyers will need to take care of registration – the documentation that legally denotes ownership of a vehicle. This involves register the vehicle in the buyer’s name, with assistance from the seller. Failure to do so can be detrimental to both parties.

Sellers will want to assist in the legal transfer of vehicle ownership to ensure that they are not held liable for fines or e-toll bills incurred after the sale. Similarly, buyers will want to have the vehicle registered their name to be able able to prove they own the vehicle, which is vital for insurance purposes, Surf4Cars’ Grassie said.

In financed deals the bank will retain the original eNATIS registration document until the new loan has been paid in full. However, if the private sale is a cash deal the buyer will have to obtain a copy of the vehicle’s registration certificate.

Buyers should also ensure that the vehicle’s VIN and engine number match those on the registration papers, Grassie warned.

The final part of the private sale process requires both the buying and selling parties to draw up a letter of sale.

This should note details such as:

  • the time, date, and location of the sale;
  • the make and model of the vehicle; the vehicle’s registration number, VIN number and engine number;
  • the amount being paid for the vehicle;
  • and details of both the buyer and seller.

This acts as the receipt for the sale and, together with the proof of payment and registration certificate, will be accompany the transfer of ownership process at the licensing department.

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Buying a car: private vs dealership