Tips for Buying a Car From a Private Seller
Buying a car from a private seller means you get to choose from a wide range of used vehicles that you might not find at the local dealership. You could potentially find unusual makes and models or even classic cars. You may also get a great deal!
But private sales don't offer the same consumer protections as you get through a dealership, so you need to go through a few extra steps to ensure you have a smooth experience. Read on to find out everything you need to know about buying a car from a private seller.
What to Consider When Buying a Car From a Private Seller
There's an old saying, Buyer Beware, especially when buying a car from a private seller. It's up to you to do your homework and check every step of the process to make sure you get a reliable vehicle for the right price.
- Make sure the seller is the legal owner: Ask to see the title and/or a lien payoff document to prove the car can't be seized from you at a later date.
- Be prepared to negotiate: Private sellers may be more willing to drop the price because they're personally motivated and don't have pressure to make a profit.
- Private sellers don't offer financing: Make sure you have cash or financing ready to go before you get too serious about your dream car.
- You'll have less legal protection: Private sales aren't regulated like dealerships are, so if something goes wrong, you might not have any recourse.
- Private sellers may not return the money: You won't be protected by Lemon Laws, which guarantee you a refund or replacement in case of a major mechanical fault.
Tips for Buying a Car From a Private Seller
Now that you're prepared for the challenges of buying a car from a private seller, you're ready for our deep dive into each step of the buying process. These tips and tricks will ensure you don't drive away with a clunker!
Set a Budget
The first step of any purchase is to work out how much car you can afford. Add up your income and expenses and see how much room you have for a car payment, or work out how long it will take you to save up to pay cash. Make sure you consider your overall needs and lifestyle.
Shop Around Private Party Auto Loans
If you need financing to buy your car, remember that not all lenders offer loans to buy cars from private sellers. You may get prequalified to see what rate you'll get based on your credit score. Shorter terms get lower rates. Credit unions may offer lower rates, too.
Research Similar Cars in Your Area
You might find your ideal car in places like Autotrader, Marketplace, Craigslist, or a classified ad. Next, compare the asking price for similar makes and models through online dealerships like Kelly Blue Book or Edmunds. If the asking price is very low, maybe something's wrong with the car.
Gather Information About the Car
Start by asking the seller how they used the car, why they're selling, and any accidents. Ask to see the service history of routine maintenance plus repairs.
Next, use the car’s vehicle identification number (VIN) or license plate number to get a vehicle history report from websites like Carfax, instaVIN.com, and AutoCheck. This gives details on accident history, damage, open recalls, title history, lien history, and service history.
Then check this information against what the seller tells you and watch out for contradictions.
Take a Test Drive and Get an Inspection
A test drive is a must. Meet in a public location during daylight and preferably with another person. Examine the car yourself and check the lights, heat, A/C, windows, locks, signals, and other features.
When driving, listen for strange noises, experiment with the steering to see if the wheels are aligned, notice how the suspension handles bumps, and test the brakes.
Get an inspection by a certified mechanic. This may cost $100 to $200 but can reveal things not shown in the reports or a test drive—plus a mechanic can explain any irregularities. You may even agree to take the car conditional on repairs or request a price knock-down based on the work needed.
Negotiate the Price and Transfer the Title
Tell the seller you know about comparable car prices and mention any reasons you think the car is worth less than the asking price. Once you've agreed and paid, the seller should sign the vehicle title to you the same day you buy it.
If the seller owes a lender, you may need to go to the lender with a check and have them sign over the title.
Go to the DMV and register the title in your name. You'll need these documents:
- The title signed over to you
- Bill of sale with the purchase price
- Odometer disclosure statement showing mileage
- Lien information if you got a loan to buy the car
- Lien release if the current title shows there’s a lien against it from the seller
Once you file the paperwork and pay any taxes and fees, you'll get a paper or electronic version of the title, and the car is yours!
Pros and Cons of Buying a Car From a Private Seller
Maybe you're still sitting on the fence about buying your next car from a private individual. If so, our handy list of pros and cons might tip the scale one way or another.
Pros
- Car prices may be lower because private sellers don't have overheads and aren't expected to make a profit.
- You don't have to worry about expensive dealership add-ons.
- You and the seller have equal negotiating skills, so you're less likely to be talked into the wrong vehicle.
Cons
- Private car sales don't usually come with a warranty, but you can see if an existing warranty on a newer car is transferable.
- You need to handle all the paperwork: title transfer, registration, financing, and trade-ins.
- You risk being scammed and having little or no consumer protections.
Have Questions About the Loan Title Process?
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How to Buy a Car From a Private Seller
If you've decided you want to go ahead and buy a car from a private seller, here's a round-up of what you need to do:
- Reach out to the seller via the listed phone number or email address.
- Check that the car is still for sale and ask some preliminary questions.
- Take a test drive and order an inspection.
- Negotiate the deal based on the price of similar vehicles.
- Pay for the car in cash or through a private-party auto loan.
- Transfer the title and register at the DMV.
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