How To Buy A Car From A Private Party

by | Dec 9, 2020

Buying a car can be stressful, but nothing is worse than spending a full day perusing car dealerships, dealing with used car sales people who talk more than they listen to what your needs are. Buying a used car from a private party not only evens the playing field, but it can save you thousands of dollars in dealership fees. 

Buying a used car third party isn’t all roses. The vehicles that are priced well and have full maintenance records available typically move pretty quickly. A good car deal can leave a vehicle owner swamped with 30+ messages in under an hour of when their vehicle is listed. You have to be on the constant search, and you need to move fast when you find the right car.

There are tons of things buyers should be aware of when buying from an individual versus buying from a reputable dealership. Here is a condensed list of the pros and cons as well as a checklist of what any vehicle should have before you agree to a sale. We’ll get into much more detail explaining these further on in our article so keep reading. 

Pros Of Private Party Vehicle Sales:

  • Less expensive pricing
  • Experience wise you are more evenly matched with the person selling the car
  • Quick and efficient (usually)
  • No dealership fees
  • No dealing with salespeople

Cons of Private Party Vehicle Sales:

  • You can’t look at reviews of other user’s past experiences
  • The car has no warranty
  • No financing options
  • No lemon law protection
  • You’ll buy the car as is (and it likely will not be detailed)
  • Potential for fraudulent activity and scammers
  • You have to take charge and ask for what you need in terms of documentation
  • You can’t be afraid to negotiate
  • No vehicle showroom

Things You Want Before Agreeing To Buy A Vehicle

Here you’ll find a list of things you should get before signing for a vehicle. 

  • Maintenance records
  • A carfax or some form of records based upon the car’s VIN
  • Knowledge on the car’s history and how many owners it has had
  • A title with the vehicle owner’s (who is also the person selling you the car) name on it
  • A clean title

Understanding If A Private Party Vehicle Sale Is Right For You

If you are the type of person who hates dealing with people and/or digging through piles of junk until you find exactly what you are looking for, buying a third party vehicle is likely not for you. You can expect to spend about an hour a day messaging, texting and calling vehicle owners about their cars trying to track down proper documentation and get the full story on these vehicles before agreeing to see them and go for a test drive. This is all with no guarantee that you will find a car that you are looking for in your price range. 

If you love to bargain hunt and negotiate then buying a car from a private seller may be exactly what you are looking for, though it won’t always be

Advantages Of Buying A Vehicle From A Private Seller

There are quite a few advantages to buying a car outside of a dealership including price, negotiating advantages, and time involved in a purchase. 

Price

Purchase price is going to be the biggest advantage that you will find when buying a car from a private party seller. Dealerships have all sorts of overhead forcing them to buy vehicles from individuals low and sell them high to turn a profit. Most vehicle owners trying to sell their car just want a fair price and to sell the vehicle fast so that they can move on with their lives. 

No dealership fees: What you don’t see on the ticketed prices at dealerships are the fees that the car dealership charges with every sale. Typically these fees are in the range of $500 to $2000! That is steep when you are trying to buy a car on a budget and you thought the car was priced fairly. With a third party seller you just have to pay the asking price, and that’s if you don’t negotiate, which you should do! This fact alone makes buying a car directly from its last owner a great way to go. 

No add ons: when you shop at a dealership the salespeople will do everything they can to get you to spend more money. Even if you buy the cheapest car on their lot they will try to sell you on a maintenance plan through the dealership or some form of warranty. If you manage to shimmy your way out of spending those extra dollars, unfortunately a bit of that will be included in the purchase price of your car. Dealerships hedge their risk with the warranties they offer by bumping up the price of all of their cars just a little. 

Negotiating Advantages

When you go to a dealership, odds are that you are out of your league. Car dealerships sell cars professionally. That is essentially all they do. Even a newer salesperson you may be interacting with has sold over 100 cars. You on the other hand have likely bought or sold under 5 cars. This gives the dealership the advantage of expertise and experience. 

If you choose to purchase your vehicle from a private seller you will likely be much more evenly matched as it is likely they have also bought or sold under 5 cars in their lifetime. This means that you are much less likely to get taken advantage of by a third party private seller. 

Time In Purchase

Another huge advantage to buying a car directly from a vehicle owner and not a dealership is the amount of time you will spend making that purchase. The person selling their car has other things to do, just like you do and they are motivated to get the deal done and the purchase documented and authorized as quickly as possible. 

A dealership by contrast will purposefully waste your time so that you become frustrated enough to make a deal so that you don’t have to waste any more of your day at the dealership. The salespeople you are negotiating with are getting paid for their time and will be there regardless of whether or not they are negotiating with you. 

Disadvantages To Buying A Vehicle From A Private Party Seller

Now onto the bad.. Buying a car from a private seller is not without its negatives. 

It Is Difficult To Know Who You Are Buying From

With a dealership, there are google reviews and testimonials from prior customers to tell you how they have treated customers in the past and pretty much what you can expect from them going forward. Unfortunately there isn’t really a way (yet) for us to review each other as peers when buying things amongst each other. You can report them to Facebook, if that is where you made your purchase, but unless it is egregious then the marketplace isn’t going to do anything about it. 

When buying a vehicle online there are ways that you can check the person who you are in contact with, as well as ways to decrease and even eliminate your risk of being scammed which we will cover in a later section of this article. 

No Vehicle Warranty

Now this really isn’t the end of the world. Worst case scenario you put it on one of Protect My Car’s extended warranties. However if you chose not to get your own warranty, any issues you have with the vehicle are going to come out of pocket. Even if the steering wheel falls off the moment you buy it. The repairs are on you.  

No Financing

When you buy a car from a private party seller you will not be getting any sort of financing. These transactions are made with cash. Now that isn’t to say that you can’t take out a personal loan or even a car loan yourself to cover the expense. You just need to pay the owner of the vehicle in cash. 

No Lemon Law Protection

Lemon laws are designed to protect car buyers from lemons. A lemon is a car that is sour essentially, meaning that it is riddled with issues from the beginning. There are various laws depending on what state you live in, but none apply to vehicles purchased from a private seller. 

Buying A Car As Is

As is means whatever condition the car is in when you agree to purchase it is the car that you are receiving. All repairs are on you from that point forward, so be sure to have the car checked out mechanically before you buy. 

Potential For Fraudulent Activity

Scammers are just part of the internet these days. Some scammers prefer to send out mass emails claiming to be African princes looking for a $100 loan until they get their fortunes back at which point the contributors will be paid back ten fold, others prefer to sell cars they don’t actually own. You have to be careful when purchasing a car online. There are steps you must follow to ensure you are not being scammed which includes getting proper documentation and checking out the car BEFORE sending any sort of cash or deposit to the seller. 

If someone is trying to get money out of you to hold the car that is a huge red flag. We will get into other red flags in a bit. 

You Have To Be Assertive

If you don’t like to negotiate or demand documentation and maintenance records, stick with buying a car from a dealership (and even then you should negotiate). When it comes to buying a car from a private party online, you can’t be afraid to ask for what you want. That means telling the person how much you expect to pay for the vehicle and being willing to haggle with them. 

It also means that you have to ask for maintenance records, a photo of the title which is documented with the person’s name on it who is trying to sell the car, information on how long they’ve had the car and why they are selling etc. There is a ton of information that you should gather before ever agreeing to meet with the person. Once you do, you have to be assertive about negotiation unless you are comfortable paying the asking price. 

You Aren’t Getting A Fancy Showroom Experience

Buying a car out of state

If you are looking for a spiffy car buying experience, buying from a private party isn’t the way to go. You won’t be walking into a sparkling showroom filled with the latest and greatest cars on the market. You’ll likely be meeting at someone’s house or in the parking lot of a public place. 

Private Party Car Purchase Checklist

Do:

  • Check the value of the car using a blue book service before reaching out to the seller to establish what a fair price for the car is
  • Get the current mileage of the car 
  • Ask for the VIN so that you can run a thorough check on the vehicle before going out to see it. 
  • Ask for service records and verify they match the records on the carfax report you ran. Just know that work done outside of a dealership will not be reported to the carfax so take that into account
  • Ensure the title is in the person’s name who is selling the car. If there are multiple names on the title you’ll want to make sure they will all be present for the sale of the vehicle. 
  • Try to purchase from a local person
  • Check for recalls
  • Test drive the vehicle being sure to get it up to highway speed
  • Bring a friend or family member for safety
  • Find a seller who will agree to meet in a public location
  • Find out if the car is still under warranty if it is within the years and mileage of the standard warranty. If it isn’t still being covered, find out why that is. This can be a red flag that the car hasn’t been maintained well. 
  • Be sure to check out the car when it is light out or in a well lit garage. If you meet at night you could miss a glaring issue covered by darkness. 
  • Trust your gut instinct on the person selling you the car and on the vehicle itself 

Don’t:

  • Go to the seller’s mechanic, be sure to pick a mechanic you trust or is highly reviewed (positively) on google.
  • Let a seller rush you through a sale. 
  • Send money to hold the car. If someone asks you for a cash deposit to be wired to them then this is likely a scam!
  • Buy a car with a salvage, or lemon title
  • Buy a car if the person selling isn’t on the title or if the car has a lien 
  • Pay for the car before you’ve seen it, test driven it and have the keys, title and bill of sale in hand. 

Documentation You Must  Ask For From A Private Car Seller

It is easy to buy a car from a dealership, they pretty much run the show and you can rely on the fact that they own the car and are doing things by the books. When it comes to buying a car from a random person you met online, you have to be careful to make sure they provide the documentation needed. 

You have to assume legal ownership of the vehicle, the process of which does vary state to state. The majority of states have a similar process requiring the same documents. Before meeting with the car seller, verify the requirements in your state. No money should exchange hands until they have given you the following documents, or at least proven that they have them and that the car is legally theirs to sell. 

Title

The title of the vehicle will tell you who legally owns the car. If the car is completely paid off, the title should be in a person’s name, in some cases there can be multiple owners and if this is the case you should remember that you need approval from all owners to legally own the car. 

If the car is still under financing, the title will reflect which finance company owns the car. Remember that with most car loans, the vehicle is collateral for not making your monthly payments. If you buy a car that isn’t paid off, and the previous owner stops making their loan payments, the car may be repossessed. 

In the chance that the seller of the car has paid off the car and the financier is still listed on the title, they will need to provide documentation of the lien payoff which will be from the financier listed on the title. If your seller shows up with one of these, it is recommended that you call the financier to verify the validity of the document. 

Types Of Titles To Be Wary Of

There are various types of titles and the most common is a clean title. This means the vehicle has never had a substantial enough issue to be declared a total loss. There are several titles to stay away from when buying a car, they are:

  • Salvage Titles: A salvage title is indicative of the car being declared totaled by an insurance company. This may be because the car was involved in a natural disaster that flooded the car, it could also mean the vehicle was in a bad car accident. Regardless of why the vehicle was given a salvage title, you should generally avoid these cars. A salvage title will be shown on the title document and can also be seen when looking up the VIN using a tool such as Carfax. 
  • Lemon/ Factory Buy Back: A lemon is a car that was riddled with problems from the start. There laws on what is declared a lemon will vary from state to state, but in most cases it involves the vehicle which has a lot of issues that stemmed from its manufacturing which affect the safety and value of the vehicle. In the case of titles, a car that has been deemed a lemon will carry that in their title. It is inadvisable to buy one of these vehicles as it will likely be a money pit. 
  • Rebuilt: A vehicle with a rebuilt title will be exactly what it sounds, the vehicle will have been rebuilt after being declared a total loss by an insurance company. While rebuilt vehicles can be great and reliable cars, more often than not they have more issues than the same car that was not rebuilt. If you intend on buying a rebuilt car, know that it should not command the same price as the  

What If The Owner Of The Vehicle Doesn’t Have The Title?

Do not buy a car if the person claiming to own the car cannot provide a title. Without a title you have no idea who actually owns the car. The vehicle could be owned by a financier, it could be stolen, it could be title washed. Don’t put yourself in the situation to be taken advantage of. If the owner of the car is claiming they lost the title, remind them that they can apply for a duplicate and that once they acquire it you would like to proceed. 

How Does A Title Transfer Work?

When you are ready to buy, transferring a title is very simple. The seller of the car should have the title with them and when money and keys exchange hands, both the buyer and seller will sign and date the title. Record the odometer reading as well. 

Important things to note:

  • If there are multiple names on the title you will have to have signatures from all owners. Therefore everyone listed on the title must be present.
  • In some states you must have a notary present for the sale of the vehicle to be valid
  • If there is no bill of sale, you should also record the purchase price on the title of the vehicle. 
  • Whatever purchase price is listed will be the amount that you pay sales tax on in whatever state you’re in

Bill Of Sale

The bill of sale is a document showing transfer of ownership of the vehicle. It will typically have personal information regarding both the buyer and the seller, the vehicle’s description and the price of the sale along with any terms. The seller is typically responsible for providing this document so be sure that whoever you buy the car from provides this. Common information on the bill of sale of a vehicle will include:

  • Basic car info such as the make, model and year
  • The cars VIN (vehicle identification number
  • The price of the sale
  • The date the sale takes place
  • Personal information of both the seller and buyer of the car including address 
  • The conditions of the sale including any guarantees the seller makes on the vehicle. In most cases of private party vehicle purchases the car will be sold as is and will be annotated as such. In these cases the buyer knows that the seller is making no guarantees on the vehicle and there is no warranty. The buyer takes on all liability at the point of sale. 

Emissions Documents

Emissions testing identifies how much pollution a car puts out in its exhaust. Many states require vehicles to pass a standard emissions test. In Colorado for example, a vehicle must pass an emissions test every other year if the vehicle is newer than a 1982 or older than a 2014. You will find emissions testing in states that are especially green motivated. States like Florida do not have emissions testing. 

When you are buying a car, know if your state mandates emissions testing, and ask the vehicle owner to provide documentation of a passing emissions test result if it does. In some states, a vehicle is required to have passed an emissions test within a certain timeframe of the vehicle being sold. Understand the laws regarding this in your state before signing for a vehicle. 

What Research Should You Do Before Agreeing To Meet

Before you message the seller with questions regarding the vehicle, do your research on common issues with the make model and year of the car you are looking at. Compile a list of the things on the car that break most frequently and when you talk to the owner, ask them about each of these issues. If you decide to take the time to test drive the car, be sure to check out those items as well. 

You will also want to check out Kelley Blue Book and NADA guides to find out the approximate value of the vehicle so that you can decide what you are willing to pay for the car. Be sure to make your search as accurate as possible including the color, engine type and drive train as well as any upgraded features the car has. 

Questions To Ask The Vehicle Owner Before Agreeing To Meet

If you have the owner of the vehicle’s phone number I highly recommend calling them about the vehicle NOT texting or using some form of messaging or email. The reasoning here is you will be able to tell if the person is lying much more easily over the phone and they will have less time to think up a lie if they are trying to pull one over on you. 

Before you dive into our list of questions, ask them basic questions about the vehicle about the make and the model. If this seller truly is selling their personal automobile, they will  know all of this information off hand. Know that some dealers will pose as individuals trying to sell their personal cars. 

There is nothing wrong with buying from a modest car dealer like this, however it is important to know who you are dealing with because a dealer will automatically have the upper hand thanks to their experience. If they ask you which car you’re calling about then they are almost definitely a dealer. 

Questions to ask:

  • How many owners has the vehicle had?
  • Has the car ever been in an accident to your knowledge? 
  • Is the title clean?
  • Is your name on the title?
  • Is the car paid off or is there a lien on the title?
  • Why are you getting rid of the car?
  • What parts of the vehicle have been replaced?
  • What mechanic do you typically take the car to?
  • Do you have maintenance records?
  • Can you provide the VIN or a carfax report? 
  • Are there any mechanical issues?
  • Ask about features you are interested in
  • Ask about the items on the common issues list you compiled in your research 
  • How much do you want for the car?
  • Have the airbags ever been deployed?
  • Who drives the car and what do they use it for?

Things To Know When Test Driving A Car With A 3rd Party Seller

After a lot of conversations with various owners, or just a few if you are lucky, you’ve finally found a car with an honest seeming owner who’s taken the time to answer all or most of your questions. You’ve set a time in a safe location to meet, now what’s next? Well, you want to make sure that you are taking your safety into account first and foremost. 

Safety Precautions:

  • Meet in a public place if possible
  • Bring a friend or family member with you if possible
  • Make sure someone knows where you are going and who you are meeting
  • Get a photocopy of the person’s driver’s license and send it to someone close to you who knows what you are doing before agreeing to get in the car with a stranger

Liability Precautions:

  • Make sure the vehicle is insured if you do not have car insurance covering you yet, otherwise in the case of an accident you may be sued directly for damages. Yes you first time car buyers without insurance! It may seem harmless to take a quick drive without insurance, but in the unlikely case that something goes wrong, and it can as you are driving an unfamiliar vehicle, you will want to have coverage. 

Test Drive Checklist

  1. How the car starts
  2. Air conditioning
  3. Heat
  4. Windshield wipers
  5. All windows and door locks
  6. All signals and lights including 
    1. Brake lights
    2. Turn signals
    3. Emergency lights
    4. Headlights 
    5. Taillights 
    6. Internal lights
    7. Brights and fog lights
  7. Brakes
  8. Stop and go
  9. How the car takes turns
  10. Suspension give
  11. Cruise control
  12. High speed performance (get the car up over 65mph)

When you are looking over the vehicle you’ll also want to take a peek at the brake pads and tires to see how much life is left in them. Adjust the price you are willing to pay for the car accordingly. Next you’re going to want to have the entire vehicle evaluated by a mechanic. 

Get The Car Inspected Prior To Purchasing

why are bmws so expensive to maintain

If you have test driven the car and everything else about the title of the vehicle has checked out, it is a very good idea to have the car inspected by a mechanic before you buy it. A mechanic (assuming you are not well versed in the under the hood workings of a vehicle) will have a much better idea of what the status of the car is and can advise you if the car is or isn’t a smart purchase. 

There are quite a few things that a mechanical inspection will cover including:

  • Brakes
  • Radiator 
  • Hoses
  • Tires
  • Frame 
  • Suspension
  • Belts
  • Fluids
  • Battery
  • Body Condition
  • Corrosion
  • Computerized Engine Check
  • Glass 
  • Lights

Beware Of Scammers

The last thing we’ll talk about is the potential for people who are trying to scam money out of you. The internet is a wild place where you can find just about anything which is awesome. It is also a place where people hide behind their computer screens and pretend to be things that they aren’t. 

Avoiding Scammers With 3rd Party Purchases:

  • Ask to see the name on the title, VIN and a photo ID before giving the seller anything including an email address. 
  • Never send money over the internet
  • Don’t put down a deposit to hold a car 

Fortunately, most sellers are going to be honest people, though you may have to dig through some crappy listings before you find the right seller with the right car. There are some common scams to look out for, these are the ones you will see the most frequently. 

Title Washing

Title washing is the illegal act of falsifying a vehicle’s title to hide a salvage or lemon title. You can protect yourself from a title washing scam by running a VIN check on the car yourself. Don’t trust the VIN check that the seller provides as they can be altered and falsified as well. The exception to this would be if the report is emailed to you directly from the company for instance Carfax. 

Guarantees

Some sellers will guarantee the vehicle through a third party money transfer service such as paypal, venmo, google pay or cash app stating that these companies will guarantee the quality of the vehicle. None of these companies get involved with the logistics of the business deals taking place through their services. Venmo is certainly not going to guarantee your car, so be aware that any seller who claims this is lying

Fake Escrow Companies

A fake escrow scam usually starts with a vehicle that is listed well below its blue book value. This should always be the first red flag for you. If it seems too good to be true.. Well you know how it goes. 

When you get more information from this seller on their vehicle they’ll likely give some excuse to a family death or being out of the country that the car is priced so low. They’ll also want to ship you the vehicle, but only after you deposit money into an account for them. You may end up with a different vehicle, a broken one or no car delivered at all. 

Now we aren’t saying anyone who wants to ship you a car is lying. What we are saying is that this can be quite sketchy and you generally want to inspect and test drive a car before buying it which you of course wouldn’t be able to do in this situation. If you have your heart set on a car that is going to be shipped to you, be sure any money you deposit is to a legitimate escrow company and one that you can hold responsible legally in the event that something goes wrong. 

Curbstoning

The final scam we’ll discuss will seem the most legitimate. As we discussed previously, in some cases dealers will pose as third party sellers leaving a vehicle in a public parking lot with a for sale sign, or posting it on a personal facebook account. 

In some cases these can be legitimate cars, but the dealer will still have the upper hand based on experience alone. We recommend calling the number listed on the for sale sign not texting and saying “hi, I’m calling about the car for sale.” If the person selling their personal car is legitimate they won’t need to ask you to clarify which car you are calling about. If the person on the other end of the line asks you which car, know you aren’t dealing with a private party seller. 

The real threat comes from title washing in these situations. These cars are usually quick flips and the car may be tampered with. Many of these professional car flippers can wash a title, alter the odometer reading, disguise flood damage. 

Other ways you can protect yourself from this type of scam include running a VIN check, asking for maintenance records as most people trying to flip a car won’t have them, and researching the person’s personal information like phone number and email address. 

We hope this article has answered all of your questions regarding purchasing a car from a third party seller and that you feel more prepared to handle such an occurrence now and in the future. Once you buy your vehicle, consider protecting it with an extended warranty plan from Protect My Car. In addition to warranties, Protect My Car also offers insurance and maintenance plans. 

Protect My Car provides consumers with extended auto warranty plans that have real coverage for vehicles that are no longer covered by their manufacturer’s warranty. Whether your vehicle was purchased new or used, if your manufacturer’s warranty is about to expire, or has already expired, an extended auto warranty plan can save you thousands of dollars in repair bills. Since the majority of vehicle repairs happen 3-5 years after the original purchase date, which many times is outside of the manufacturer’s warranty coverage period, leaving you responsible for paying the full repair bill. However, when you purchase a policy from Protect My Car, you could pay as little as $100.00 for your major repairs. That’s a lot of savings!

Resources:

https://www.valuepenguin.com/auto-insurance/buy-used-car-private-seller#advantages
https://en.wikipedia.org/wiki/Lemon_(automobile)
https://www.cbc.ca/news/business/lemon-laws-7-questions-about-a-consumer-protection-law-canada-doesn-t-have-1.2951106
https://www.nationwide.com/lc/resources/auto-insurance/articles/buy-car-from-private-seller
https://www.compare.com/ways-to-save/vehicle/buying-car-from-private-seller
https://cars.usnews.com/cars-trucks/buying-a-car-from-a-private-seller-
https://www.autolist.com/guides/bill-of-sale-car#:~:text=A%20bill%20of%20sale%20for%20a%20car%20is%20a%20legal,the%20seller%20drafts%20the%20bill.
https://www.colorado.gov/pacific/dmv/gas-vehicles

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