The material presented here is for educational purposes only and is not intended to be used as financial, investment, or legal advice.
How to Buy a Used Car from a Private Party
So, you’ve finally found what looks like your ideal used car but it’s being sold by a stranger (or even a friend or relative). Negotiations on price are just one benefit of the private-buy process. Learn how to buy a used car from a private party, from financing and fair market value to test drives and titles.
If you’re looking for a used vehicle, purchasing from a private party has certain benefits — no sales tax, for example. You may also be able to get a bargain on the ride you want if the seller is motivated.
There are ways to make sure your vehicle purchase goes smoothly and ensure you’re getting a reliable ride for your money. Before you buy that Corvette on Craigslist, read this guide on how to buy a used car from a private party.
If you need financing, get preapproval. You can save for a car with some fun money-saving challenges. If you don’t have the savings to pay for your ride in cash, consider financing. You could potentially qualify for an auto loan from a credit union or bank to help you with your purchase. (Tip: You might be able to add an extended warranty program if you finance through a credit union or bank, so be sure to ask about your options.)
Research the type of vehicle you want. Do you want a smaller sedan with good gas mileage? An SUV for weekend adventures? Something sporty? A convertible? Peruse sites like Craigslist, Autotrader.com and eBay Motors to see if you can find a good fit.
When you find a vehicle you like:
- Research its fair market value. Look up the value of the car on Kelley Blue Book or Edmunds.
- Get a vehicle history report. Companies like CARFAX™ and AutoCheck® will research the car’s vehicle identification number (VIN) and share details about ownership, accident history, title status, mileage and more.
- Take the car for a test drive. Bring a friend for safety, meet in a public place and go during daylight so you can see the car well. Ask for proof of insurance before driving the vehicle.
- Get the car inspected by your mechanic or use a mobile service like CARCHEX®. It’s worth paying for a vehicle inspection; it can save you thousands of dollars down the road.
- Ask for identification and make sure the name on the ID matches the name on the vehicle title.
When taking a car for a test drive, check for:
- Exterior wear and tear (tires, brakes, rotors, undercarriage).
- Any startup hesitation.
- The car’s performance at highway speeds and in stop-and-go traffic.
- The functionality of electronic devices (locks, lights, power windows, AC/heater, radio, etc.).
How to Pay for a Vehicle
Meet at your bank or credit union. Never bring cash. Use a cashier’s check or money order and don’t hand over payment until you have the keys in hand. You should also get emissions documents on the car and a bill of sale that includes:
- Year, make and model
- Sale price
- Sale date
- Names and addresses of buyer and seller
It’s also smart to line up car insurance before driving away so that you and your new ride are protected.
About That Title …
Before buying, make sure the vehicle has a legitimate title. Check the title for:
- Lienholders – a third-party lender with a financial interest in the vehicle. Lienholders need to be paid off before you can assume ownership. If the seller has a loan on the vehicle, you can work with your lender and theirs to obtain payment and transaction details.
- Salvage titles. Salvage vehicles have been considered total losses by an insurance company. Most experts caution against buying them.
- Words or phrases like rebuilt, lemon and factory buyback. Such vehicles have a documented history of mechanical and engineering flaws.
- Out-of-state titles. Unless you can confirm the vehicle’s history, avoid buying a car with an out-of-state title.
If you’re in the market for a used car, truck or SUV, buying from a private seller can be an effective way to get the ride you want at a price you can afford. If you choose to go that route, just be sure to follow our tips to make it a safe and enjoyable buying experience — and hopefully a great driving experience for years to come!