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How to buy a car from a private seller

Fact-checked with HomeInsurance.com

It all started with Craig’s List. The Digital Age delivered a new way to buy and sell cars from the comfort and convenience of your home. Buyers can often purchase a vehicle for significantly less than they would pay at a dealership, and no credit score or proof of income is needed. To buy a car from a private seller today, all you need is cold, hard cash.

However, what seems like a simple arrangement can be anything but. Dishonest sellers, lemon cars and scams fill the classified pages, looking for their next victim. When you buy a car from a private seller, you must always exercise caution to protect yourself and your investment.

This is what you need to know when buying a car from a private seller.

Pros and cons of buying a car from a private seller

There are many benefits to purchasing a vehicle from a private seller, but it is still something that should be treated with the utmost caution as there are also some cons.

Pros

Affordability

It costs a lot to buy a car from a dealership. When you buy a car from a company, you are not just paying for the price of the car but also the dealership’s overhead. A private seller does not have to worry about business insurance or employee pay; the seller only has to accept your payment and turn over the keys. Put simply, private sellers can afford to charge less than dealerships, so they usually do. There are also no dealer fees or extra add-ons that could impact the cost of your new car. 

No Shady Sales Tactics

Car salesmen are notorious for their shady dealings and misleading half-truths. It can be very intimidating to approach a car dealership, because often you are at the mercy of a professional who negotiates for a living. A private seller is much more likely to be more forthcoming and upfront, making the buying process far less stressful than it would be with a professional car salesman. 

Room for Negotiation

Time is on your side when you buy from a private seller. Unlike a car salesman who has all day to entertain buyers, a private seller likely has more important things on the agenda, like work and family. Selling a used car is not necessarily an adventure that they would like to last the whole day, so they are more inclined to negotiate with you on price so they can complete the sale. 

Cons

No warranty

When you buy a used car from a private party, you are doing just that – buying a used car. There will not be an opportunity to purchase a warranty or invest in extra add-ons. The car comes as it is, and it is up to you to ensure that it is a good buy that’s worthy of your investment.

Cash only

Nearly all private sales are paid with cash at the time of sale. While a dealership will work with you to get financing in-house, you will have to secure your own financing with a standalone auto or personal loan when purchasing from a private seller. This will enable you to pay the private seller upfront in cash, while your financial institution gives you more time to pay off the loan. Many buyers choose to save up and pay for a private sale in cash because of the added interest rates rather than adding extra money to the total bill. 

Fewer protections

The Lemon Law does not apply to private car sales, so if you choose to buy from an independent seller, you are on your own to ensure that the vehicle is in the proper condition. When there is something wrong with a car that you have just purchased, most dealers will offer a repair or replacement, but in most states, you will not receive those protections when you engage in a private car sale.  

Documentation needed to buy a car from a private seller

An important part of how to buy a car from a private seller, there are a few forms of documentation that will need to be addressed. Your state may also require that you use the services of a notary for your bill of sale.

DocumentWhy it’s important
TitleStates the owner of the vehicle
Bill of saleRecords the official details of the sale
Emissions inspectionsEnsures the vehicle passes your state’s emissions requirements, if applicable
  • Title: The title is just as important as the set of keys because it ensures that the person selling the vehicle is the rightful owner. The title transfers formal ownership between the seller and the buyer, and it is kept on file with the Department of Motor Vehicles (DMV) for your state.
  • Bill of sale: A bill of sale is an official invoice that records the sale of the vehicle. It should include the car’s make, model and year, along with the vehicle identification number (VIN), odometer reading, the price paid, the date and full contact information for both buyer and seller. If there are any special exemptions or notations regarding the state of the car, this is where those details should be listed. 
  • Emissions inspections: Some states require that all vehicles pass an emissions test in order to complete the required annual registration with your DMV. The seller may be obligated by your state to pass an emissions test before they can legally sell you the car. 

Buying a car from a private seller

Buying a used car from a private seller is a little different than buying a car from your average dealership. These are some steps you should take before you finalize that sale:

Obtain a vehicle history report

You can use the car’s VIN to pull a vehicle history report on the car you want to buy. Online vendors like Carfax make it super easy to get all of the details on the car, including the number of owners, any accidents or incidents and even a “Lemon” designation. 

You can confirm the odometer reading is accurate based on past reporting, and it will also tell you whether there are any existing liens on the vehicle, such as unpaid auto loans.

The vehicle history report is your best chance at understanding where a vehicle has been before it landed in your hands.

Ask questions about the vehicle

Don’t be shy when you talk to the owner of the vehicle. The more questions you ask, the better informed you will be to make a responsible purchase.

These are some questions you can ask to glean more information about the vehicle you are considering:

  • What issues have you experienced with the car?
  • Why are you selling?
  • Are you the driver?
  • What did you use the vehicle for?
  • Have there ever been any accidents?
  • Has there been any damages to the car?
  • Do you have any service records to share?
  • Where has the car been maintained? 
  • Are there any parts that have been replaced or missing?
  • Do you have a history of owners?
  • Are the airbags original?

Take a test drive

If the seller can show proof of insurance, take the car for a test drive so you can see how it runs. Not only can you make sure that you like driving it, but you can also check the car’s functionality.

If the seller does not have insurance on the vehicle, you may be liable for any damages that occur while you are behind the wheel, and your own insurance policy is unlikely to cover the expenses. 

Regardless of whether you drive the car, be sure to check the overall wear on the vehicle. You should also inspect these crucial items to ensure that they are in proper working condition.

  • Brakes
  • Windows
  • Door locks
  • Turn signals
  • Steering
  • Acceleration
  • All lights (brake, reverse, headlights, interior)
  • Climate control (air conditioning, heat, defroster)

If the seller insists on riding with you, take a photo of their driver’s license and send it to a friend as a safety precaution. Even if it seems silly, you are still getting in a car with a stranger, so it’s important to protect yourself.

Get an inspection

Even the most well-intentioned buyers may not know about a problem under the hood. That’s why you should always take the vehicle to a mechanic of your choice who can give an unbiased, professional assessment of the vehicle. To make it more convenient, you can ask the seller to meet you at your mechanic’s location so you both can review the report together.  

Obtain your own mechanical reading

Technology has made it easier than ever to tap into your car’s computer. Today, there are new programs like CarMD, Fixd and Zubie Key that are all able to communicate with your car and provide a detailed diagnosis using a single vehicle sensor and a mobile app on your phone. This won’t work for cars made before 1996, but if you are interested in a newer vehicle, this could give you many of the details that a mechanic’s report would provide.

Arrange payment

If everything checks out, be prepared to provide payment for the vehicle. Most private sellers will require cash or a money order for payment, and be sure to collect a bill of sale along with the rest of the necessary documentation. 

Transfer the title

All owners of the vehicle will need to sign the title. As the buyer, you will also need to sign the title and include the date of sale.

Considerations after buying a car from a private seller

All private sales are considered final, so you will not be able to return the car if you change your mind or discover issues later. If you buy the vehicle and then it suddenly stops working, there is no warranty nor any entitlement to repairs or reimbursement. When you buy a car from a private seller, you are buying the car “as is.”

After the sale is complete, take a copy of the title to the DMV so you can register your new car and obtain new license plates.

Be sure to purchase car insurance right away. Liability insurance is required for drivers in most states, so you should check your state’s minimum requirements and find the best auto insurance for your new car.

Scams to be aware of

Unfortunately, not all sellers are honest and not all sales are legitimate. The internet has made it even harder to flush out the scammers from the real car ads, but there are common identifiers that you can look for.

These are some of the most popular scams to watch out for when you are buying a used car from a private seller.

Title washing

Any time that a car is sold as salvage, there must be a notation of salvage value in the title. However, to make a car seem more attractive, sellers can sometimes scrub this information from the title in the hopes that you won’t dig any deeper. 

Instead, you can use your VIN history report to confirm that the vehicle is clean.

Fake Escrows

Sometimes, scammers will say that they are unavailable to meet because they are out of the area, or they prefer to use a third-party service for safety. Whatever the reason, they request that you pay for the vehicle and its shipping upfront. 

They often are able to hook people with an offer that’s too enticing to give up, such as a super-low price special, just so you will take the sale. You are asked to make payment to an escrow account so that the car can be sent to you, but instead, the escrow company turns out to be a fraud, and the seller has just made off with your hard-earned dollars. Now, you are broke and still without a vehicle.

Curbstoning

Sometimes, a private seller isn’t a private seller at all. There have been incidents where car dealerships will pose as a private seller, either wasting your time with a belated confession or selling cars that are unlicensed and therefore illegal in some areas. 

It’s not such a huge deal if everything checks out, but many times, professional salesmen are trying to move cars with hidden damage that would never pass inspection at their own dealerships. To prevent this from happening to you, examine the title and service records for any discrepancies.   

The takeaway

  • Private car sales can not only cost less but offer greater convenience and a much easier buying process than going through a dealership. 
  • Scammers can try to hide or change a vehicle’s history, so always pull a VIN report to confirm.
  • If you have payment upfront and are comfortable negotiating the sale of a vehicle yourself, buying a used car from a private seller could be the right choice for you.

It can be intimidating buying a car no matter where you purchase it from, and buying from a private seller is no exception. While it can be a faster, smoother transaction, you could later find that the car is not in the actual condition that the seller said it was. To protect yourself, always pull a vehicle history report and have the car inspected by a mechanic of your choice to confirm that you are not falling victim to a lemon.

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