How to buy a car from a private seller
While buying a new car just requires going to a dealership, you might wonder how to buy a used car. Buyers can opt for a certified pre-owned car from a dealership or buy a used car from an owner. Each option has its pros and cons, so if you’re considering buying from a private seller, there are factors you should think about before making your decision. Bankrate can help you navigate this process, from where to look to buy a car from a private seller to going through the process of buying a car from a private seller.
Pros and cons of buying a car from a private seller
Purchasing a car through a private sale has obvious benefits, but there are also several downsides that drivers should be aware of.
Pros
Likely more affordable
Sales prices typically presented as-is without extra charges
Sellers might be more open to bargaining on price
Sellers might provide complete service history records for the vehicle
Cons
Fewer ways to check a seller's reputation
Financing options are more restricted unless you've secured a personal loan from your bank beforehand
You'll likely need to handle title, taxes and tags separately
No warranties available
How to research used cars in advance before buying
Before purchasing a used car, it’s essential to conduct thorough research in advance. Start by determining your budget and the type of vehicle you need. Then, research different makes and models to find ones that suit your requirements and have good reliability ratings.
To better understand the experience of owning a vehicle you are considering buying, use online resources such as consumer review websites, automotive forums and reliability reports. These are great ways to gather information about common issues and maintenance costs for specific vehicles.
How to make sure the price for the used car is fair
Once you’ve found a car you are interested in, you’ll want to make sure that the price is fair. To do this, see if you can obtain vehicle history reports to check for any past accidents or damage. With this information, check the expected cost on a resource like Kelley Blue Book, which can provide price estimates based on make, model, mileage and condition.
Additionally, if you can access the car before buying, consider having a mechanic inspect any car you’re seriously considering to ensure there are no hidden problems. By conducting thorough research, you can make an informed decision and find a reliable used car that meets your needs for a price that makes sense.
What to ask for when buying a car from a private seller
When a driver purchases a used car from a private seller, there are several important documents that may be required in order to complete the sale:
Title: The title is a document that states who owns the vehicle. With a private sale, the seller needs to transfer the title to the buyer. Drivers should pay special attention to titles that have words like “salvage” or “rebuilt,” which indicates that the vehicle has been totaled or needed extensive repairs in the past.
Bill of sale: The bill of sale is the receipt for the transaction. It should include the vehicle’s make, model and year, the VIN number, the sale price and the name and contact information of the buyer and the seller.
Smog test results: Some states require vehicle owners to get a smog test every year to check the car’s emissions. Drivers who live in these states should also ask the seller for the most recent smog test results.
Release of liability form: This is a legal document that transfers responsibility and ownership of the vehicle from the seller to the buyer, typically including details such as the names and addresses of both parties, vehicle information like make, model, and VIN, sale price and clauses releasing the seller from any future claims or liabilities associated with the vehicle.
Completed vehicle transfer form: This document is used to officially transfer ownership of a vehicle from one party to another, typically requiring details about both the seller and buyer, vehicle information and signatures to confirm the transaction.
Lien release: If a financial institution like a bank or credit union is involved in the transaction, a lien release is a document issued by a lender or financial institution confirming that a loan against a vehicle has been fully paid off and releases any claims or interests they had on the vehicle.
Steps to buying a car from a private seller
Buying a used car from a private seller may be more complicated than purchasing a certified pre-owned used vehicle from a dealership. Although both methods require a bit of research, buying from a private seller requires a more hands-on approach to make sure you are getting a reliable vehicle. Here are the basic steps that you might follow when purchasing a used car from a private seller:
Shop around
Your first step is likely to set a budget, identify several makes and models you are interested in, and start shopping for vehicles in your area. You can also shop for vehicles based on price alone if you are flexible on the type of vehicle. If you do not have a vehicle in mind, you might consider safety ratings, reliability and customer reviews. To see a vehicle’s safety ratings, you can check the National Highway Traffic Safety Administration database or the Insurance Institute for Highway Safety database. You could also cross-reference ratings and used car values through sites like Kelley Blue Book, Edmunds and NADA guides.
Contact the seller
Once you have spotted a vehicle you are interested in, contact the seller and let them know you are interested in buying their vehicle. Most experts recommend asking the current owner questions about the vehicle, like how long they have owned it, how often it gets serviced, if the vehicle has been involved in any accidents and if there is a lien on the vehicle. You can also ask for the vehicle’s VIN and look up the car’s history using a free service online.
Be sure to read the description the seller provided and ask any questions about the vehicle’s condition if it is not already specified. Just because a vehicle has not been involved in an accident does not mean it is free of any major mechanical or body issues.
Meet in a safe location
While you have likely had contact with the seller before meeting, it is still important to pick a safe location to see the vehicle. The fact is that there are scammers and malicious actors out there who may try to carry out fraudulent activity, and meeting in a neutral public space is a deterrent to this. It also gives you the opportunity to inspect the vehicle thoroughly without feeling pressured or uncomfortable.
Examine the vehicle
When you’ve identified a car you might like to purchase, set up a meeting to check it out in person. Begin by thoroughly inspecting the vehicle exterior for any signs of damage like scratches, dents or rust. Ask for documents such as the title to ensure that the car’s year, make, model and mileage match the seller’s listing. Next, examine the interior. Turn on the car and test the functionality of essential components such as seatbelts, doors, windows, headlights, heat, air conditioning and windshield wipers to make sure everything is in working order.
Once you’ve given the car a thorough look, take the car for a test drive. Pay close attention to any unusual sounds that could indicate potential issues with the engine, transmission or brakes. This comprehensive inspection and test drive will give you a better understanding of the car’s condition and help you make an informed decision before finalizing the purchase.
Consider taking the car to a mechanic
While an initial inspection and test drive might highlight any major issues, a vehicle can still run with major internal issues that the seller may be keeping from you or unaware of themselves. Consider bringing someone with you who has experience working on vehicles or even taking it to your local mechanic, with the seller’s permission, to give it a quick inspection before you make a purchase. You can also ask the seller for any service record documentation they have kept over the years.
Close the deal
If the vehicle meets all your criteria, it might be time to talk price with the seller. Start by asking if they’re willing to negotiate on the listed price, indicating your interest while gauging their flexibility. It’s essential to conduct research on the vehicle’s value beforehand, allowing you to present compelling reasons for a potential price reduction, especially if there are necessary repairs or maintenance issues. Gather estimated costs and the recommended price range of a car like the one you’re considering buying to present as you make your case.
Once a price is agreed upon, you’ll need to finalize the transaction. Payment should be made to the seller, who should then provide the keys and the title. Depending on your state’s regulations, additional paperwork, such as a bill of sale or notarized signature on the title transfer, may be required. Contact your local Department of Motor Vehicles for guidance on registration procedures and getting new license plates. Finally, arrange car insurance for your new vehicle to ensure it’s adequately protected on the road.
Scams to watch out for
When buying a car through a private seller, buyers should be aware of scams. Here are some of the most common ones to look out for:
Title washing: Title washing happens when a vehicle has a salvage title, and the seller alters the document to remove mention of the salvage. Buyers can check a vehicle’s salvage history during a VIN check.
Guaranteed payment: Some sellers ask buyers to pay using a payment platform, like Venmo or PayPal, in exchange for a used car guarantee. In reality, these payment platforms are not involved in any used car sales, and there is never a guarantee with a private seller transaction unless otherwise specified.
Curbstoning: Curbstoning happens when a professional dealership pretends to be a private car seller and makes changes to a vehicle to hide major problems like flood damage. Most curbstoners do not have service records, which is one way to rule them out.
Odometer tampering: Some older used cars may allow for easier odometer tampering. Mileage that is very low for the year could be a red flag for odometer rollbacks. Sellers who have replaced the motor or transmission need to specify if the listed mileage is the actual mileage.
Financing a used car from a private seller
Financing a used car from a private seller involves securing a loan from a bank, credit union or online lender to purchase a vehicle directly from an individual rather than a dealership. Unlike dealership financing, which often involves working with the dealer’s finance department, financing a used car from a private seller typically requires the buyer to arrange the loan independently. You can also pay in cash if you have the liquid funds available.
If you do not have the disposable funds to buy a used car from a private seller, you may need a personal loan. If the seller is willing to work with you, you may be able to apply for a vehicle loan from your bank after finding the right car. However, a pre-approved personal loan up to a certain amount may allow you more flexibility in your car shopping. You could ask the seller if they would accept a certified check from your bank written to them directly for the sale in lieu of a cash payment.
Financing a used car from a private seller offers flexibility and potentially lower interest rates. Still, it’s essential to thoroughly research lenders, understand loan terms and ensure the vehicle meets the lender’s requirements before proceeding with the purchase.
Frequently asked questions
You do not need car insurance to complete a used car transaction. However, you will need car insurance to legally drive the vehicle from the location of the sale to your home and later to the DMV. If you have an existing car insurance policy, it might cover the new car for a short period of time before the vehicle gets added to the policy.
There are several websites and mobile apps where you might look for used vehicles being sold by private sellers. Some of the most common platforms are Craiglist, Cars.com, Facebook Marketplace, Edmunds, Kelley Blue Book, eBay Motors, CarGurus and TrueCar.
If the seller doesn’t have the title of the car, proceed with caution and clarify the reason for the absence of the title. Usually, the seller should possess the title to legally transfer ownership of the vehicle. If the title is lost or misplaced, the seller can apply for a duplicate title from the relevant Department of Motor Vehicles (DMV) or equivalent authority in their area. However, if the seller is unable to provide an explanation or take steps to obtain a duplicate title, you should reconsider the purchase to avoid potential legal complications or issues with ownership transfer.
To check if a car is stolen when buying from a private seller, you can verify the vehicle’s identification number (VIN) with local law enforcement or online databases like the National Insurance Crime Bureau’s (NICB) VINCheck or the National Highway Traffic Safety Administration (NHTSA). Additionally, ensure that the VIN on the vehicle matches the one on the title and registration documents provided by the seller. If there are discrepancies or if the seller refuses to provide VIN information, you may want to reconsider the purchase.
