Best Auto Buying Alternatives:Private Sales, Auction Cars, and Rental Cars

Jack R. Nerad | Mar 03, 2021

In this world, it is nice to have alternatives, and that is doubly true when it comes to buying a car. 

car buying alternatives

While today's car dealers are doing a good job of shedding the poor reputation a few of them had in the past, some dealer practices still cause trust issues. If you’d rather not make a conventional vehicle purchase at your local dealer, you probably want to learn more about the best auto buying alternatives. 

Each alternative discussed in this article allows you to conduct your vehicle search online and offers you ways to complete the entire deal online, perhaps without ever leaving your favorite easy chair. If this sounds too good to be true, be aware that while these online car-buying alternatives do offer potential advantages over buying a car at the local dealer, they also have drawbacks of their own. And some of those drawbacks might make you reconsider pursuing an alternative. 

That said, the alternatives to buying from a dealer, most notably private sales, auctions, and purchases from rental car companies, are certainly worthy of investigation. Not only that, we've done much of the legwork for you. Continue reading to learn what each of these car-buying alternatives is, and discover their pros and cons.

Pros and Cons of Buying a Car from a Private Seller - Find the best car deals!

If you don't want to buy a car from a car dealer, you can choose to purchase a vehicle from a private seller in what is called a private-party sale. In the past, this meant scouring the classified ads in the newspaper or finding a car in a local parking lot with a For Sale sign in the window. Now, the internet makes searching for cars for sale by private sellers easier than ever.

Though the methods used to find a privately sold car are increasingly high-tech, the pros and cons of buying a car from a private seller are much the same as they’ve been in the past: 

Pros

  • Wide selection
  • Low prices
  • Easy ability to negotiate on price

Cons

  • Difficulty assessing condition
  • Dealing with individuals
  • As-is, no warranty
  • Difficult financial transactions 

Looking at the pros and cons in more detail, a private-party purchase offers you an amazing variety of used vehicles. Each year in the United States something like 40 million used vehicles change hands, so your chances of finding an appropriate vehicle are excellent. 

At the same time, cars purchased from individuals can be much lower-priced than cars purchased from a dealer. The individual seller has no physical store to operate or employees to pay. Nor does the typical private party seller need to make a profit from the vehicle sale. They just want to dispose of the car while getting some reasonable return for their effort. Because of that, individuals can be easier to negotiate with than the typical dealer.

That said, there are several disadvantages to purchasing your car from a private seller. First, while it is relatively easy to find a private-party used car online, moving the transaction forward after that can be challenging. It is difficult to assess the quality of the car online even if you purchase a vehicle history report, and making arrangements for a personal meeting with the seller can be awkward or even dangerous. 

Private sellers offer their cars "as-is," which means you have no recourse if the car turns out to be problematic. Then there is the issue of payment and titling. Typically the payment will be in cash, but the seller will likely require you to provide a cashier's check or certified check and might ask you to complete the transaction at their bank. 

If your purchase involves a car loan, one held by the seller or one you require to buy the vehicle, the process becomes even more complicated and is virtually impossible to complete online. 

Pros and Cons of Buying a Car at an Auction - Find the best car deals!

Auctions are another car-buying alternative, and they can provide many of the benefits of purchasing from a private party with some of the buyer and seller safeguards more typical of a dealer transaction. 

Auto auctions have been held for almost as long as there have been car dealers, and tens of millions of vehicles are sold that way each year. Letting the general public in on the auctions is a newer phenomenon, and it has been furthered by the advent of online auctions.

While dealer auctions typically require all participants to be state-licensed dealers, public auctions are open to everyone with no license required. Additionally, some websites allow the public to participate in dealer auctions, though they may require setting up an account and paying a deposit or fee. 

Both online dealer and online public auctions offer a wide variety of vehicles from a number of sources. Dealers will often sell vehicles they took in as trades at auction. Individuals put cars up for auction. And auctions also include vehicles that have been repossessed by finance companies, cars seized by law enforcement, salvage title cars declared a total loss by insurance companies, and government-surplus vehicles.

Here are the pros and cons of buying a car online at an auction:

Pros

  • Low prices
  • Wide selection
  • Ability to assess seller
  • Easy access to vehicle history report
  • Systems for financial payments
  • No negotiation purchase (one-price or timed auction) 

Cons

  • As-is vehicle purchase with no warranty (or very limited warranty)
  • Difficulty in assessing condition
  • Non-binding bids 
  • Shipping/delivery costs

In more detail, auctions can offer lower-than-retail pricing because they are part of the wholesale supply structure for dealers. Selection can be wide and, through seller reviews, you might have the ability to assess the honesty and quality of the seller. Most auctions give easy access to vehicle identification number information, enabling buyers to view a vehicle history report

If you hate to negotiate, you might prefer the auction system. The typical online auction is a timed procedure that lets you see the asking prices and the bids as the process wends toward its conclusion when the auction time expires. Some auctions allow buyers to purchase at a set price immediately. In either case, there is no negotiation, though the bidding process might be just as nerve-wracking to some people. 

One piece of good news is that auctions, like eBay Motors, offer established methods of online payment including the ability to use an escrow service that "holds" the money until the transaction is completed to both parties' satisfaction. Transfer of title is similarly streamlined and can be accomplished online. 

As for the disadvantages of an online auction vehicle purchase, as with any online purchase, it is difficult to evaluate the quality of the vehicle being bought. No amount of vehicle history reports and online photos and videos can substitute for an in-person inspection and test drive. In an online auction the vehicle is usually purchased "as-is," and there are no warranty coverages or much recourse if the vehicle does not live up to expectations. 

Some online auctions, like eBay Motors, also use a non-binding bid process, which means you might find yourself mired in back-and-forth negotiations after all. You also have to arrange and often pay for shipping and delivery of the vehicle.

Pros and Cons of Buying Rental Cars from Rental Car Companies - Find the best car deals!

Purchasing a former rental vehicle from a car rental company is another alternative to buying from a car dealer, and, for the right person, it could be a surprisingly good choice. The process is straightforward, easy, and leverages the advantages of online buying while allowing the customer to get a long look at the vehicle before buying it. 

As anyone who has rented a car probably realizes, the major car rental companies buy hundreds of thousands of vehicles each year. When a vehicle's service with the company ends, it is disposed of either by selling the car at auction or by selling it to an individual. For car-buyers seeking a deal on a car that is one or two years old, an off-rental vehicle could be a good solution. 

Here are the pros and cons of buying a vehicle from a rental car company:

Pros

  • Low prices
  • No negotiation (one-price)
  • No sales pressure
  • Broad selection of late-model vehicles
  • National/international companies as sellers
  • Easy ability to test drive with online reservation
  • Well-defined, secure payment and title transfer
  • Vehicle financing available 
  • Vehicle history report available
  • Scheduled maintenance completed

Cons

  • High-mileage vehicles
  • Narrow range of available vehicles
  • Narrow range of equipment levels

In taking a deeper dive into buying a vehicle from a car rental company, the advantages are many. 

Prices are low because the car rental company simply wants to sell the vehicle at a price above the price it would get for the car at auction. No-haggle prices are posted online for all to see, as is a description and photo of each vehicle. 

One of the best aspects is you can make an online reservation to pick up the vehicle at a local outlet of the rental car agency and test drive it for as long as a couple of days before deciding to purchase it. Or you can give it back, paying a low rental fee that is refunded if you buy another car from the company.

Sales consultants are not working on commission and there is no sales pressure. Many of the former rental vehicles are under factory warranty and additional warranty coverage might be offered through the online buying process, depending upon the company. Some companies offer a short-term buy-back guarantee. 

Perhaps best of all, most car rental sales companies offer easy access to vehicle financing. They also have a well-defined and very secure method of payment, paperwork completion, and title transfer. Most often you will have the vehicle in your possession before you own it due to the unique test-drive arrangement, and the paperwork can be completed online or via postpaid overnight delivery. 

The downsides are few but they are worth noting. First, most vehicles for sale by car rental companies will have more miles on them than the typical car of the same model year. On the other hand, each vehicle has been inspected numerous times during its life in rental service and all scheduled maintenance has been performed. 

Another downside is rental cars typically are not equipped with every option but most do have the equipment a typical buyer would desire.

Finally, if you’ve ever rented a car, you know they are indifferently cared for while they’re in service. They never see a detail or a wax job, the people who rent the vehicles don’t care about them, and while they might be reconditioned prior to sale, unknown problems could still arise due to corporate and customer indifference.

Summary - Find the best car deals!

Alternatives to buying a used vehicle in the traditional way are out there. Each one has its upsides and its downsides. Understanding each alternative — and your needs as a buyer — will guide you to a satisfying, cost-effective vehicle purchase.

Jack R. Nerad has covered car buying, auto retailing, and the automotive industry for more than three decades. He has held editorial director posts at dealership, consumer, enthusiast, and market research publications; appeared on television as a car-buying expert; and hosts a popular podcast. He is the author of several books, including The Complete Idiot's Guide to Buying or Leasing a Car.

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