How to buy a car from a private seller

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Used car sales in the United States are on the rise. It was estimated that Americans purchased 39.4 million used cars in 2018, compared to 17.3 million new cars the same year. McKinsey predicts that used car sales will increase much faster than new car sales over the next five years.

When a driver is shopping for a used car, they can buy a certified pre-owned car from a dealership or find a used vehicle from a private seller. Both options have upsides and downsides, and it is important for car shoppers to figure out which choice is right for them before buying a used vehicle.

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 of buying from a private seller

The biggest upside of buying a used car from a private seller is the price. In most cases, purchasing a car from a private seller is cheaper than going to a dealership, especially because there are no added fees. In addition, most private sellers are willing to negotiate, whereas a dealership might be more firm in the sticker price.

Cons of buying from a private seller

There are a few big downsides to buying a car from a private seller. First, the driver has no way of knowing whether the seller is reputable. Unfortunately, some private sellers scam buyers by lying about the vehicle’s service records and accident history. The buyer might end up paying for repairs unexpectedly, even if the seller claimed the car was in good condition.

Another downside is that there are no financing options when buying a car through a private sale. Most certified pre-owned car dealerships offer financing options for drivers who want to pay off the car over time. With a private seller purchase, the driver would have to get pre-approved for a personal loan or find another financing option before completing the sale.

What is needed to buy a car from a private seller

When a driver purchases a used car from a private seller, there are several important documents that are 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.

Steps to buying a car from a private seller

Buying a car from a private seller is somewhat more complex than purchasing a certified pre-owned used vehicle from a dealership. Here are the basic steps that you should follow when purchasing a used car from a private seller:

Shop around

The first step is 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. Ideally, drivers should look for vehicles that have good safety ratings and seem to be reliable based on owner reviews. Search Kelley Blue Book to see ratings for specific vehicles, including their used value.

Contact the seller

Contact the seller and let them know you are interested in buying their vehicle. Ask 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.

See the car in person

Once you find a strong contender, arrange a time to see the vehicle in-person. Start by inspecting the vehicle on the outside for scratches, dents, rust and other imperfections. Then, look at the interior and make sure that the seatbelts, doors, windows, headlights, heat, air conditioning and windshield wipers work properly. Take the car for a short test drive and listen for sounds that might indicate an issue with the engine, transmission or brakes.

Close the deal

If the vehicle checks all the boxes, you are ready to close the sale. This is the point when you should talk to the seller about negotiating a lower price. Once the price is determined, you will pay the seller and the seller will give you the title. Contact your state’s DMV to find out what additional paperwork is required, how the registration process works and how to obtain new license plates.

Scams to watch out for when buying a car through a private seller

When buying a car through a private seller, drivers 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 them 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.

Frequently asked questions

What is the best car insurance company?

The best car insurance company varies based on factors like the driver’s location, the type of coverage they want, the amount of coverage they want, their credit score, their age and more. In terms of ratings, some of the most reputable car insurance companies are State Farm, Amica, USAA, Allstate, The Hartford and Geico.

Do you need car insurance to buy a used car?

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.

Where do I find used vehicles from private sellers?

There are several places to look for used vehicles being sold by private sellers. Some of the most common platforms are Craiglist, Cars.com, Facebook Marketplace, eBay Motors, CarGurus and TrueCar.