Buying a car in Germany: private seller or dealer?

This article is dated as shown. Laws, fees and prices have changed since then. Check the figures before you rely on them.

In this article we look at the advantages and disadvantages of buying a car from a private individual or from a dealership.

Buying a car from Germany. At one time this was practically the only way to get a genuinely reliable German car in Russia. Many of you will immediately picture huge German car markets with long rows of vehicles. The sellers: pensioners who for 10 years drove them to the bakery at weekends. Can you picture it? Sadly, those romantic times are gone for good. When the author arrived in Germany in 2013 and decided to visit the largest (and by then the only) market in Berlin, he found a few dozen cars of no particular value and some odd sellers who were a long way from the image of respectable “Bürger”.

Today the market has moved online, and for us as buyers this of course makes choosing a car easier, but on the other hand it takes away that “physical” contact with the sellers.

Let us open one of the most popular car sales websites, www.autoscout24.de. At the time of writing, just over 840 thousand used cars were listed for sale on this site. Of these, private individuals were selling only 120 thousand cars. Just imagine, only 14 percent of all used cars are sold by private individuals! In Russia, for example, according to the statistics of one popular website, around 350 thousand out of 420 thousand used cars are sold by private individuals. Comments, as they say, are superfluous.

What to know when buying a car from a dealership

When buying from a dealer, distinguish between the statutory liability for defects and an additional warranty. The buyer's rights cannot be reduced to a universal “one-year guarantee”. The terms of the contract, the nature of the defect and the status of the parties affect the claims available. Before buying, record the known damage, repairs and mileage information.

Naturally, the dealer will prepare the purchase contract for you and, most likely for an extra fee, will arrange temporary registration plates for the car and prepare the customs declaration for the refund of value added tax (VAT) if the car is exported.

Buying from a company does not in itself guarantee a VAT refund. What matters is the tax regime shown on the invoice, the delivery terms and the proof of export. Before paying, agree the final amount, the documents and the procedure for any refund with the seller. Under the margin scheme you cannot count on a refund of a separately stated 19% of the full price.

We have listed the most obvious advantages of buying from car dealers. Among the “neutral” features we would count dealers' opening hours: like all companies in Germany, car dealers work on weekdays and on Saturdays until midday. Do not expect to get to a dealer on a Sunday; as everywhere else in Germany, it is a day of rest. In addition, dealers usually do not refuse a proper test drive of the car, which in our view is essential when buying.

All these advantages are, of course, free only at first glance. In reality you pay for all of it by buying the car for more than you could have bought it from a private individual.

What to know when buying a car from a private individual

A private sale does not automatically exclude all rights. Check the contract terms on liability. Under § 444 BGB the seller cannot rely on its exclusion or limitation where a defect was deliberately concealed or a guarantee of the item's characteristics was given. The outcome of a dispute depends on the circumstances and the evidence.

Apart from having no possibility of a VAT refund, you will also have to settle all the legal formalities yourself, namely drawing up the contract, re-registering the car or obtaining transit plates.

Of course, there are other advantages besides the lower price: private individuals can usually show the car in the evening or on a Sunday, but it is better not to count on an independent test drive.

When choosing a private seller, what matters is the condition of the car, the documents, the contract terms and the possibility of an inspection. A rare model or an attractive price does not remove these questions.

When buying for export, compare the final cost and the terms of the specific deal. A VAT refund is not guaranteed, and the status of a dealership does not prove the absence of defects. Check who is named as the seller in the contract and which information they are responsible for.

These conclusions are confirmed by the statistics given at the beginning of the article: in most cases buyers prefer to pay a car dealer more for the additional guarantees.

In any case, given the arguments above, we recommend not relying only on yourself when choosing and buying a car, but trusting professionals in their field. Our company has gained sufficient experience of buying cars both from car dealers and from private individuals.