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Used car sales in the United States are on the rise. According to Kelley Blue Book, over 40,000 used cars were sold in 2021. Despite average price increases of over 25 percent compared to 2020, U.S. drivers still bought 10 percent more used cars in 2021 than the previous year.
While there are many potential benefits to purchasing a used car, finding the right vehicle may not be as easy. Shoppers have the choice of buying a certified pre-owned car from a dealership or purchasing a used vehicle from a private seller. Both options have upsides and downsides, and if you’re buying from a private seller, there are some things you may want to consider before finalizing your purchase.
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.
|Price may be cheaper
Sales price often listed as-is with no added fees
Motivated sellers may be more willing to negotiate on price
Seller may be willing to hold vehicle, deliver vehicle, or offer other benefits
Some sellers may have vehicle’s entire service history records on hand
|Seller may not be reputable or honest about vehicle history
Financing options are likely limited unless you previously obtained a personal loan from your financial institution
Title, taxes and tags will likely need to be obtained separately
No warranties available
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 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 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:
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 NADAguides.
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.
Examine the vehicle
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. Confirm the year, make, model and mileage matches the seller’s listing. 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.
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 checks all your boxes, you could be ready to close the sale. This is the point when you should talk to the seller about the price. A good tip is to ask the seller if they have any room to negotiate on the listed price to gauge if they are willing to be flexible. Do your research on the vehicle’s value, and be prepared to explain why a required repair may substantiate a lower price.
Once the price is determined, you will pay the seller and the seller should hand over the keys and the title. Some states may require a bill of sale or notarized signature on the title transfer. Contact your state’s department of motor vehicles to find out what additional paperwork is required, how the registration process works and how to obtain new license plates. Once you’ve made your purchase, you will also likely want to explore how to get car insurance for the vehicle.
Scams to watch out for
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.
- 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.
Frequently asked questions
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 on 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.
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.