If you’re looking to pay the rock-bottom price for a used car, the answer is almost always buying from a private seller. That means buying from an individual, not a business routinely engaged in buying and selling cars for a profit.
Yes, you give up the fancy showroom and probably any financing options. But there are advantages to private sales, too.
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Here are some of the important pros and cons of going with a private seller and what you need to know as a buyer.
Advantages of Buying a Car from a Private Seller
Whether you’ve decided to buy a car from a private seller in order to get a good deal, avoid hidden fees or simply because you found the exact vehicle you’ve dreamed of, there’s a number of advantages to purchasing from an individual.
Low price is the most important advantage to buying from a private seller. In fact, if your first concern is budget, but you have some cash on hand and don’t need to finance, it’s almost always the way to go.
First, there are no “dealer fees.” Nearly every dealer will add $500 to $1,000 to the price of the car in “dealer fees,” “documentation fees” and other fees that get tacked on to your bill of sale—sometimes at the last minute as you get ready to write a check. Since a private-party seller is not a dealer and has little or no overhead, the private seller can offer a lower price
Second, private sellers typically won’t try to sell you extra warranties. While problems are usually rare, even short warranties cost money or add risk for the seller, and they drive up the price on used cars.
Level Playing Field.
A professional car dealer has probably sold hundreds or thousands of cars. You, on the other hand, have probably bought and sold just a few. But when you buy from a private seller, chances are you and the seller are negotiating on a much more level playing field.
When you buy from a private seller, they want to finish the sale and get back to life. This means a ready buyer who can pay immediately will probably get a good deal.
In contrast, a professional car salesperson is going to be on the lot all day. They’re not in a rush, and buyers come in all day long. It’s much easier for them to turn down a lower offer on a car than it is for a private seller who needs to get back to their life. This favors the buyer.
Disadvantages of Buying a Car from a Private Seller
No Dealer Warranties.
A private seller can’t offer you a warranty. But if the car is relatively new and has low mileage, you can check whether existing warranties transfer with the car.
The vast majority of private vehicle sales are made with upfront cash. 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. But you’ll typically have to line up financing yourself.
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. With a private seller, once you sign the title and hand over your money, you’re committed.
No ‘Lemon Law’ Protections.
“Lemon laws” are designed to protect car buyers who purchase defective cars. While each state has different requirements, the basic idea is the same: If a dealer sells you a car with a significant mechanical defect that can’t be fixed quickly, it’s required to offer you a replacement or refund. But only a few states extend lemon laws to include used cars, and most don’t extend them to private sellers.
No Social Media Recourse.
If you’re not happy with your experience with a car dealer, you can leave a negative review on social media and review sites such as Yelp. Most dealers are very sensitive to bad public reviews, and they will make reasonable efforts to make you happy.
However, there’s usually no such recourse with a private seller. Again, in the vast majority of cases, when you buy a used car from a private seller, you’re buying it “as is.”
Risk of Repairs.
When you buy a used car from a private seller, you are taking on all the risk of repairs. If the transmission falls out of the bottom of the car tomorrow, you’ll have to pay for the repair. If possible, ask a mechanic to inspect the car before you purchase it to reduce your risk.
Always keep these risks in mind when you’re calculating your offer.
Documentation for Buying a Car from a Private Seller
When you buy a car, you also need to assume formal ownership of the car with your state’s department of motor vehicles. Each state has its own process, but in general, here’s what you’ll need.
Title. The car’s title tells you who owns the car. If the seller has financed the car with a third-party financing company and hasn’t paid off the loan, it’s a red flag. The seller doesn’t fully own the car and has no right to sell it to you without the finance company’s permission. The financing company has a lien on the vehicle and can take it back from you if the seller stops making payments on the car.
When you go to buy the car, the seller should be able to show you the title—and the seller should be listed as the owner. There should be no financing company listed on the title, or the seller should have a lien payoff document from the financing company. However, even if the seller presents a lien payoff document, call the finance company directly to verify it.
Be alert for the following kinds of title problems:
- Salvage Titles. A salvage title indicates that the vehicle has been certified as “totaled” by an insurance company. In other words, at one point in time, the car needed more repairs than it was worth. It could also indicate that the car has severe problems, such as flood damage or corrosion.
- If a title indicates the vehicle is “rebuilt,” it generally means the car has been deemed a total loss to the insured and has been sent to an authorized rebuilder to make the car roadworthy again. These cars should not be commanding the same price as a car that is not rebuilt.
- Lemon/Factory Buyback. If the car has ever been deemed a “lemon,” most states require that fact to be annotated on the title.
Bill of Sale. The bill of sale should identify the following:
- Car year, make and model
- Vehicle identification number (VIN)
- Sale price
- Date of sale
- Names and addresses of buyer and seller
Notation of any conditions or guarantees on the car. In the vast majority of private sales, the proper notation would read “sold as is.” This indicates that the seller is making no guarantees or warranties, and the buyer understands this fact.
Emissions Documents. Check for smog test or emissions testing paperwork if your state requires it. In some states, the seller must have an emissions test done within a certain time frame before the sale.
What if the Private Seller Doesn’t Have a Title?
Don’t buy the car. You have no way of knowing if the title is clear and therefore no way of proving you own it.
If the seller claims they lost the title, then they can apply for a duplicate title and should provide it to you before you buy.
Title Transfer Procedures for a Used Car
When you actually purchase the vehicle, you’ll need your signature and the seller’s signature on the title with the date. If there are multiple names on the title, you’ll need their signatures, too. If they aren’t available, don’t buy the car. The seller needs to come with a clean title.
Be sure to record the odometer reading on the title at the time of sale. If there’s no bill of sale, you must also generally record the sale price on the title document. Some states—Ohio and Pennsylvania, for example—may require a notary public to sign off on the transfer of the title.
Getting a VIN Check when Buying a Car from a Private Seller
It’s usually a good idea to get a vehicle history report, also known as a VIN (vehicle identification number) check. You can get a VIN check online from a number of vendors. The VIN check can tell you a variety of things about the car, including:
- Ownership history
- Title blemishes
- Existing liens on the vehicle
- Vehicle maintenance history
- History of an odometer or title fraud
- Flood damage
- Airbag deployments
- “Lemon” status
Finding the VIN on a Car
You may be able to get the VIN from the seller over the phone, so you can do a VIN check before you even go out to see the car. The seller can find the VIN on the driver’s side of the dashboard, under the hood in front of the engine, inside the driver’s doorjamb, under the spare tire or in a rear wheel well.
Alternatively, you can ask the seller to provide a VIN check. Ideally, you’ll be able to get it directly from the VIN check vendor’s website. This eliminates the possibility of the seller altering the information on the report or deleting pages before handing it over to you.
Questions to Ask When Buying a Car from a Private Seller
It’s OK to ask the seller lots of questions. Some good questions include:
- Why are you selling the car?
- Has the car been in an accident?
- Can I see your service records?
- What car parts are no longer original?
- Where have you been taking the car for maintenance?
- Who owned the car before you?
- Have the airbags ever been deployed?
- What issues have come up in the car since you bought it?
- Who has been driving the car, and what was the car used for?
Test Drive the Car
Before you test drive a car with a stranger riding along with you, ask to see a photo ID. Take a photo of it, and email it to a friend using a mobile device. This is for safety reasons.
Ask the seller for proof of insurance. If the car isn’t insured and you have an accident, the injured party could sue you for damages. This is especially critical if you’re a first-time car buyer because you probably don’t have insurance yet.
If possible, inspect or test each of the following items:
- Air conditioning
- Power steering (steer all the way to the left and right and listen for crackling or whirring noises)
- All windows and locks
- Signals, brake lights, reverse lights and headlights
- Cruise control
- Stop-and-go performance
- Highway performance
Checklist for Buying a Car from a Private Seller
Here’s a simple rundown of what to do and what not to do when buying a car from a private seller.
Before seeing the car, look up the fair market value of the vehicle using Kelley Blue Book.
- Ask the seller for the mileage on the car so you can do your research.
- Ask the seller for service records.
- Check the registration. Does it match the title and the seller’s ID?
- Deal with local sellers, if possible.
- Check the VIN on the car against the paperwork. It should match exactly.
- Test drive the vehicle, getting it up to highway speed.
- Check for recalls by going to www.safercar.gov.
- If the car is less than four or five years old and has fewer than 100,000 miles on it, call the original dealer to find out if the manufacturer’s or dealer’s warranty is still in effect. If it isn’t, ask them why.
- Buy from a seller who can meet you in person.
- See the car during the day. It’s too easy to miss big problems at night, like rust on the frame.
- Bring a friend for safety.
- Don’t rely on the seller’s chosen mechanic for an inspection.
- Don’t show up with cash. Use money orders or a cashier’s check, if possible. You can meet the seller at your bank with a cashier’s check in hand—and they should have the title and keys in theirs.
- Don’t let sellers rush or pressure you.
- Don’t use wire services to send money until you have the car, the keys and a verified title in hand.
- Don’t buy cars with out-of-state titles unless you can confirm the vehicle’s history.
- Ask for ID. Don’t buy from any private party other than the individual named on the title and registration.
- Don’t buy a car with a salvage title.
In summary, when next you want to buy a car from a private seller, 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.
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If they do, this could be a sign of odometer fraud. That is, the seller may have illegally manipulated the odometer to show a lower mileage than the car actually has