How to Buy a Car from a Private Seller
If you’re looking for a used car at the cheapest price possible, the answer is almost always buying from a private seller, which will save you money by skipping the dealership. Only note that this approach can require a lot of research on your part and many things to look out for. But worry not, as this comprehensive article will teach you everything you need to know on how to buy a car from a private seller.
While the biggest advantage is lower prices, the major hurdles of buying from a private seller is the risk of scams. You’ll need to take the time to research the car you’re interested in buying, ask the right questions, get the car inspected by a trusted mechanic and go for a test drive before you finalize the sale and drive off. Read on to find out the dos and don’ts, what questions to ask, the documents you need to request, things to look out for when inspecting and test driving, and some common scams to be wary of.
How to Buy a Car from a Private Seller: Important Things To Do
General Dos and Don’ts
- If possible, choose to buy from local sellers. Always ask the seller to meet you in person.
- Look up the fair market value of the vehicle before meeting up to see the car.
- Insist on seeing the car during the day so that you can inspect better and avoid missing big problems.
- You can rely on your own chosen mechanic for an inspection. If the seller suggests their mechanic, insist on bringing your chosen mechanic instead.
- The listing would typically include the age of the vehicle and the number of miles on it. If the car is less than four years old and has fewer than 100,000 miles on it, call the original dealer beforehand to find out if the manufacturer’s warranty is still in effect. If it isn’t, ask them why.
- Ask for the seller’s ID, which should match the individual named on the title and registration. Only deal with the person who is named on the vehicle’s paperwork.
- Check the VIN on the car, it should math the paperwork.
- Don’t buy a car with a salvage title and don’t buy cars with out-of-state titles unless you can confirm the vehicle’s history. Common scams involve sellers selling salvage vehicles from out of state in order to hide the vehicle’s damages. If you’re not familiar with car titles and what you should avoid when buying a used vehicle, this will be explained in more detail further below.
- Don’t let the seller rush or pressure you. If they consistently do not give in to your requests as per the above “Basic things to remember”, it’s a sign that you should avoid dealing with them.
- After deciding to buy the vehicle, don’t show up with cash but meet the seller at your bank. The seller would bring the title and keys and you would have a cashier’s check in hand. Otherwise, use a money order, which is essentially equivalent to a check.
When you’re buying a used car, you should learn everything that happened to the vehicle that might affect its performance and value. Therefore, getting a vehicle history report is a must.
For this, you will need the Vehicle Identification Number (VIN) of the vehicle. Each vehicle has a unique VIN. You can get a VIN check online from a number of third-party vendors such as AutoCheck and Carfax.
A vehicle history report will tell you important things about the vehicle, including:
- Ownership history
- Vehicle maintenance history
- Airbag deployments
- Flood damage
- Title blemishes: Every new vehicle starts with a clean title, and major damages can change or “dirty” the title. It’s ideal to get a used vehicle with a clean title, however even in this case, it’s still crucial to perform thorough inspection to make sure you’re getting what you pay for, because a “clean” vehicle doesn’t equate to one without problems.
- History of odometer rollback fraud or title fraud: A common fraud with used cars is disconnecting, resetting, or altering of a vehicle’s odometer with intent to change the number of miles indicated. The first way to detect odometer rollback fraud is to compare the mileage on the odometer with the mileage number on the vehicle maintenance or inspection records and CARFAX vehicle history report.
- “Lemon” status: A lemon vehicle is one that turns out to have several manufacturing defects affecting its safety, value or utility. Any vehicle with such severe issues may be termed “a lemon”.
- Existing liens on the vehicle: When a lien is in place on a car title, there is an outstanding loan on the vehicle. That means the seller has not paid off the loan in full and thus does not wholly own the vehicle; there are creditors and third parties who could claim ownership of the vehicle. This prevents the car from being sold.
How To Find The VIN On a Car
The rule of thumb is you should try to get the VIN from the seller over the phone, so you can do a VIN check before you meet up to see the car.
The VIN can easily be found:
- On the driver’s side of the dashboard
- Inside the driver’s door jamb
- Under the spare tire
- In a rear wheel well
- Under the hood in front of the engine
Alternatively, you can ask the seller to provide a VIN check. In this case, you’ll want to get it directly from the VIN check vendor’s website instead of having the seller send it to you. This prevents the seller from altering the information on the report or deleting pages.
Questions to Ask The Seller
It’s normal and reasonable to ask the seller lots of questions. After all, you’re buying a used vehicle that you know nothing about. Below are some important questions that you should get clear answers for:
- Who owned the car before you and which state did that person live in? (This is to avoid out-of-state “title washing”, a common scam which will be explained later.)
- Who has been driving the car, and what was the car used for?
- What issues have come up with the car since you bought it?
- Why are you selling the car? (There are dealers out there who illegally pretend to be private sellers. They buy many salvaged titled cars at auction and sell them back. Meanwhile, a true private seller should have only one vehicle to sell, and they should have a fair reason for it, like moving to another state. Scam dealers can lie, of course, but you can try to detect any abnormalities when talking to the seller.)
- Where have you been taking the car for maintenance?
- Can I see your service records?
- Has the car been in an accident?
- Have the airbags ever been deployed?
- What parts have been replaced and are no longer factory original?
Buying Used Cars: Understanding Car Titles
4 Major Titles
As above, it’s ideal to buy a car with a “clean” title and to avoid getting one with a “salvage” title. You’ll often hear that buying a used car with a “branded title” has negative connotations too. So what do these titles mean? It’s crucial to understand their implications when you’re shopping for a used vehicle.
There are four major classifications for car titles, although note that they can have different names depending on the state you live in. Below are the most common title names you typically come across:
Clean – A clean title means the car hasn’t received any major damage that might deem it “a total loss” (when the car loses from 75% to 90% of its value). This is the most ideal title to search for when buying used cars. However, it’s still extremely important to have a vehicle inspected before purchasing, even with a clean title.
This is because a clean title does not necessarily indicate that the car has no problems whatsoever. A car that has been in a wreck can still have clean titles if the car’s value was not totaled in the process. Additionally, a vehicle’s title would not be affected by an accident if it was fixed without the insurance company finding out.
Clear – Not to be confused with clean, a clear title means there’s no financial lien, that is there is an outstanding loan on the vehicle. If there is an existing lien, the car is not owned free and clear by the seller alone, but there are creditors or third parties that could claim ownership. A car with a lien does not belong wholly to the seller, thus preventing the vehicle from being sold.
Salvage – A vehicle is deemed a total loss and given a salvage title when it is involved in a major accident and is damaged anywhere from 75% to 90% of its value. It’s typically not safe to buy salvage title cars and you should avoid buying one, as these vehicles may need extensive repairs and may be uninsurable. It might even cost you more than the purchase price to repair or insure these vehicles.
Rebuilt/reconstructed – A vehicle that was repaired after being classified as salvage would receive a “rebuilt or reconstructed” title. It means after being repaired due to the extensive damage, the repaired car was inspected by the state and then classified as being “fixed”. You should also avoid reconstructed cars just as you would with salvaged cars, as even though they’re repaired, the damage that once made them salvaged was too great that most of the time, they would most likely need further costly repairs and may not be safe to drive.
In general, you should avoid a vehicle with a “branded title”. A branded title indicates that there have been serious defects or problems with the car. Note that each state’s list of title brands varies, so you might come across other branded titles including flood, lemon, bonded, and junk that certain states recognize. To be sure, check your local DMV or Secretary of State.
Car Title Washing
As above, it’s recommended that you should pick a local seller. In addition, you should purchase a vehicle that has not crossed state lines. This is to avoid a common scam called title washing.
Depending on how a state classifies the names for its branded titles, some title brands may not transfer over to the new state. Illegal dealers might take advantage of this to buy salvaged cars at auction for almost nothing, get rid of the salvage title and sell them to out-of-state buyers to make bigger profit at the cost of the buyers.
Therefore, always double check the title brands that are recognized by your state or the state the car came from. Other must-dos are running a vehicle history report and having the car inspected by a certified and trusted mechanic that you choose yourself.
- Oldie But Goodie: What To Do After Buying A Used Car From A Dealer?
- How To Tell If A Used Car Has Been In An Accident?
Getting Proof of Insurance
Another must if you should also ask the seller for proof of insurance. This is especially critical if you’re a first-time car buyer because you probably don’t have insurance yet. If the car isn’t insured and you have an accident, the injured party could sue you for damages.
Pre-purchase Inspection and Test Drive
If possible, make your offer contingent upon the vehicle passing an inspection by your own mechanic. Many auto repair shops provide a vehicle inspection service for around $100 to $200. It’s well worth it to ensure you aren’t buying a flood-damaged or mechanically unsound car.
Consider meeting at the mechanic’s shop. If you’re serious about buying the car, this should be a reasonable request of the seller and indicates they aren’t intentionally concealing any vehicle issues.
Established dealers are used to customers asking for a pre-purchase inspection from their own mechanic. It’s less common with private sellers.
Pre-purchase Inspection: Items to Check
Before you purchase the car, it’s best to have your trusted mechanic inspect or test each of the following items:
- Frame, body condition and exterior surface: First, walk around the car and check the exterior of the car and review for wear and tear.
- Tires: See if there is an uneven tread on the tires. Remember that you can check the manufacturing date of the tires to check their age. Old enough tires should be replaced even if the vehicle doesn’t have a lot of miles on it.
- Brakes: Check for wear and tear on the gas and brake pedals, floor matting, brake pads and tires. If you’re buying a relatively low-mileage vehicle, they should not show much wear. If they do, this could be a sign of odometer rollback fraud – the seller illegally manipulating the odometer to show a lower mileage.
- Signals, brake lights, reverse lights and headlights
- Cruise control
- Air conditioning
- All windows and locks
- Computer diagnostic analysis, if possible (more on this below)
Test Driving The Car
After the inspection, take the time to thoroughly test drive the car. Before getting in, look underneath the car and observe for any leaks and see if everything seems intact. Next, get in the car and start it up. Listen for any hesitation in the start. Let the engine idle for a few minutes then take it for a ride.
Check for the power steering by steering all the way to the left and right and listen for crackling or whirring noises. It’s crucial to make sure you travel both in stop and go traffic and at highway speeds while listening and feeling for anything out of the ordinary.
While driving, remember to test every electronic device. One of the most important items is the air conditioning: let it sit on for around 5 minutes to make sure it is running nice and cold.
Computer Diagnostic Tools
If you cannot get an experienced mechanic to check out the car before you buy it, a fair alternative is to get a computer diagnostic to run a thorough read of the vehicle’s condition and performance. Having an inspection by a trusted mechanic is always the ideal way to go though, especially if the car you want to by cost quite a bit of money.
Before, to run a computer diagnostic, you would have to take the car to a mechanic who had the necessary equipment to plug into the car’s onboard diagnostics (OBD-II) port in the car’s computer, read the code and translate it. Today, new technology makes it possible for you to get a computer reading on a car right from your mobile device.
For example, there are apps such as Fixd, CarMD, Hum+ and Zubie Key. These apps should work with any vehicle built in 1996 or later.
When you buy the app, you’ll get a sensor that plugs right into the onboard computer. Then you can get a code reading and computer diagnosis of any problem right on your mobile device, including engine analysis.
Getting Insurance on Your New Car
Most states require drivers to carry either liability insurance or a proof of financial responsibility. Some policies allow up to 30 days before you have to provide notice on a new car. At a minimum, you must have your state’s mandatory liability insurance coverage.
If you already have car insurance on another car, you may have a grace period before you must formally arrange coverage on your new car. Note that if you only carry the state’s mandatory liability insurance on your old car, then that’s all you’ll have on your new one during the grace period, if any. You can add in additional types of protection.
It’s always a good idea to get coverage in place immediately after you have bought a used vehicle to get yourself some protection. Most major insurers allow you to arrange coverage online or over the phone.
Another note in case you’re financing the car (although most private-party car sales are for cash) is most lenders will require you to add comprehensive coverage on the car. When financing, you may also want to consider “gap” coverage insurance, which pays off the balance owed on the car which exceeds your comprehensive coverage payout if after a serious damage, the car is deemed a total loss.
When you buy a used vehicle from a private seller, you will need to register the license plate. In most cases, you can do this at the state DMV office in person. Alternatively, you can usually pay your registration tax online or by mail, and they’ll mail you your plates and registration stickers.
Another convenient option is to have an authorized tag agent’s office (a private business) collect and forward your registration documents for a fee.
In order to register the license plate, prepare the following documents:
- Proof of insurance coverage
- Vehicle safety inspection (in certain jurisdictions)
- Emissions test documents (in certain jurisdictions)
Scams To Watch Out For When Buying Used Vehicles
When buying a used vehicle from a private party, there are a couple of common scams you need to watch out for.
Title Scams and Title Washing
Although a clean title does not mean problem-free, when buying used cars, you should only consider buying a vehicle that has a clean title. You should never pay for a car unless the seller can immediately transfer the title to you. If the seller says they do not have a title, they may be trying to hide the fact the car’s original title is branded.
You should avoid vehicles with branded titles, unless you’re fully aware of what you’re getting into and decide to buy the vehicle for good reasons. A branded title can indicate that the car was stolen and recovered, salvaged, flood-damaged, or used as a taxi or police car.
Another common title scam is title washing. Some dishonest sellers can also buy salvage or flood-damaged cars at auction for cheap and then try to sell them to private buyers out of state. Depending on the states, the salvage title of the vehicle can be got rid of. This is why this scam is called “title washing” (washing a dirty title). This way, the seller can avoid disclosing the serious damage that occured.
Curbstoning is when an unlicensed dealer buys many vehicles for resale but acts as if they’re a private-party seller selling their own used vehicle. A dealer must be licensed, so this is illegal in most states. And if the seller is already lying about their dealership status, you wouldn’t want to buy the vehicle that they are trying to sell. These professional car dealers often have the technical ability to rollback odometers to fake a low-mileage reading and mask serious problems with the car.
There are a few ways you can detect a curbstoner. Whenever you call a seller, say you’re calling about “the car you advertised” instead of saying exactly the make and model of the car. If the seller responds “which one,” you’re most likely dealing with an unlicensed dealer who has more than one vehicle for sale.
Secondly, it’s reasonable for the interested buyer to ask for the seller’s ID. With that, you can do a Google search on their name and phone number. If it shows up on several used car listings, you’re definitely dealing with a curbstoner.
In addition, most private sellers should only have sold one or a very few used vehicles, so they should not be overly familiar with the buying, selling, titling, and registration of vehicles. If they are, it’s proof that the seller has done a lot of selling and is a curbstoner.
When you buy and sell cars as private parties, both sides will need to share quite a bit of personal information. However, it’s abnormal for the seller to demand a lot of private information from you even before letting you see the car. It may be an indication that rather than selling you a car, they are trying to steal your personal information.
Even when you agree to a purchase, you should be wary of which personal information a private seller would actually need. For instance, a car seller should not need your social security number.
How to Buy a Car from a Private Seller: Advantages & Disadvantages
If your top priority is affordability, but you have some cash on hand and don’t need to finance, skipping the dealership will be the best option. Most buyers go this route because of this major advantage.
- Private sellers typically won’t try to sell you extra warranties: Even short warranties cost money or add risk for the seller, so private sellers won’t try to sell you extra warranties.
- No dealer fees: Nearly every dealer will add from $500 to $1,000 to the price of the car, which include “dealer fees,” “documentation fees” and other fees to account for their overhead, sometimes at the last minute as you get ready to write a check. Since a private-party seller is typically only selling one or two vehicles and thus has no or almost no overhead cost, they can offer a lower price than a dealership.
You’re in a better position to bargain
- Negotiation skills: A professional car dealer has sold many cars, while you have probably bought and sold one or just a few, so you’re at a disadvantage when negotiating with a dealership. On the other hand, with a private seller, the playing field is more level.
- The urge to close the deal quickly: Typically for a private seller, a ready buyer who can pay immediately will be ideal, so if you do have cash on hand, you will most likely get a good price and finalize the deal quicker. In contrast, dealerships get a continuous stream of prospective buyers, thus a professional car salesperson is not in a rush to get the sale over and done with to get back to their life. So buying from a private seller typically favors the buyers who have cash ready.
No ‘lemon law’ protections
When you buy a new car, you are protected by “lemon laws”. While each state has different requirements, generally buyers who purchase cars with a significant mechanical defect that can’t be fixed quickly are entitled to a replacement or refund.
But buying used cars is more risky in many ways, thus you need industry knowledge to protect yourself. Only a few states extend lemon laws to include used cars, and most don’t cover sales by private parties.
No right to cancel the sale
In some states, dealers are required to let buyers cancel the purchase within a few days if they’ve had a change of heart or have detected a serious problem with the car. However, you cannot go back once you sign the title and hand over your money to a private seller.
Most private vehicle sales are conducted with cash and you’ll typically have to find a way for financing yourself. In some cases, if you have solid credit and a good relationship with a bank or credit union, you could get prequalified for a vehicle loan or personal loan.
Risk of repairs
When you buy a used car from a private seller, you are taking on all the risk of repairs. This is why it’s of utmost importance that you have a trusted mechanic to perform a thorough inspection of the vehicle and take some time to test drive it before deciding to buy. In addition, you must ask the seller for the service record as well as getting a VIN check to see if the vehicle has had any wear and tear, defects or damages from accidents or flood.
No dealer warranties
A private seller can’t offer you a warranty. But if the car is relatively new, that is less than four or five years old, and has low mileage, that is fewer than 100,000 miles on it, you can call the manufacturer or the original dealership to check whether existing warranties are still in effect and if it will be transferred with the car.
No social media recourse
If you’re not happy with your experience with a car dealership, you can leave a negative review on social media and review sites. This is to warn other potential buyers about unscrupulous behaviours, and this might prompt the dealership to try to make it up for you, as most dealers are very sensitive to bad public reviews and will try to clear their name. However, there’s obviously no such social media recourse with a private seller.