Are you planning to buy a used car from a private seller?
Many people, including young drivers, find second-hand cars a good option when acquiring a car under a tight budget. Research shows that a new car loses around 40% of its value over its first year of use. You can find a model that is only a few years old but sells at a price significantly lower than the original price.
But don’t forget that buying a used car also comes with its risks.
This article focuses on how to evaluate these risks and how to avoid them. It informs you of various vital aspects of the car buying process, thus enabling you to buy a used car that provides great value for your money.
Apart from private sellers, online used car vendors and car dealerships are popular alternative sources of used cars.
Is buying a used car online a good idea?
Buying a used car online saves you time and money as you don’t need to go to nearby car outlets. You also get a chance to compare different car models at the comfort of your home. Online car vendors showcase a wide variety of car styles on their websites. You can take your time to view their offers in in-depth detail with just the click of a button.
When the specifications of a specific car meet your expectations and needs, you can go ahead and buy at your own time. There is no pressure from salespeople who usually want to make you buy right there and then when you visit a dealership.
Buying a used car can work against you if you fail to do your homework correctly, regardless of who sells the vehicle to you.
There are various things that you should seriously think about when planning to buy a used car from a private seller. We start with advantages and disadvantages.
Advantages of buying a car from a private seller
- Lower price: If your objective is to pay the lowest possible price for a used car, buying from a private seller is almost always the way to go. You may not even need to use any financing options if you have some cash at hand. Private car sales do not have charges like dealer fees, documentation fees, and other fees that increase your bill. Also, private car sellers don’t have overheads or profit margins. They can offer a lower price than parties who sell cars as a profit-making business.
- Lesser time to close a deal: A private car seller will want to finish the sale and get back to their life. If you are ready to buy, you can pay immediately you find a good deal.
- Professional car sellers are not in a rush. They find it easier to turn down an offer for a lower price since buyers come in all day long. This lack of urgency on the dealer’s part puts you at a disadvantage when trying to get a good bargain.
- You negotiate at a level playing field: Most private car sellers have probably sold only a few cars. You, on the other hand, could also have dealt with only a few car sale transactions. The chances are that both of you negotiate on a fair playing ground. This case is unlike dealing with a professional car dealer. They already have sold thousands of cars. Professional car salespeople are more likely to use their knowledge and experience to close the deal in their favor.
- Recommendations from friends: Your friends may know of a trustworthy person who is selling their car. Their recommendation word could work perfectly for you as you try to minimize the risks associated with buying a used car. You will know in advance where the current owner purchased the car, and how he has been using it. This knowledge is vital when you want to make a solid decision.
- No warranties: There is a high possibility that you will buy a car without a warranty. A private seller cannot offer you a guarantee. If the car is still new, however, the seller could transfer the warranties with the vehicle. Warranty transfer is not always possible, so you might want to discuss the issue with the seller if you are lucky to find a relatively new car on sale.
- You cannot cancel the sale: There’s no way you can get your money back once you sign the title and hand over the money to the seller.
- No financing options: Most private car sales require the deposit of upfront cash, so you have to arrange to finance the deal. If you have a good credit rating and a stable relationship with your bank, you could get prequalified for a personal loan or vehicle loan. But the private seller doesn’t step in anywhere to help you.
- No ‘Lemon Law’ protection: ‘Lemon’ laws protect car buyers in case the car is defective. If you buy a vehicle that has a significant mechanical defect, the law requires the dealer to offer you a refund or replacement. If you buy from a private car seller, this law cannot cover you. So, you are at a loss in case you discover a defective in the car after buying it.
- No online reviews: It is easy to find reviews by customers who have bought cars from a professional car dealer. Such reviews can enlighten you on pertinent aspects of the dealer, and hence help you make an informed decision. When buying from a private seller, however, there’s hardly any source of information about the seller. You buy the car ‘as is’ and in faith that the seller told you the truth.
- You may have to put up with a lot of repairs: There is a risk of many repairs when you buy a car from a private seller. This point emphasizes the importance of a thorough before-purchase inspection by a mechanic you trust.
There are some significant advantages to buying a car from a private seller. Also, there are substantial risks that you should keep in mind when calculating the value of an offer.
It is undeniable that you have a lot of footwork to do.
But it is worth the effort.
With knowledge of the right steps to follow, you can make incredible savings on your car purchase. It is also possible to get a car that will exceed your expectations.
Let us now look at the things you need to know as you put down a practical plan for buying a used car from a private seller. There are things you need to do before you go to see the car, while you are viewing it, and after you buy it.
Things to do before you go to see a used car you are interested in buying
Don’t hesitate to ask many questions about the car on sale. Here are some great questions to help you understand both the seller and the state of the vehicle:
- Why are you selling the car?
- Can you send me your service records?
- Has the car been involved in an accident?
- Which car parts have been changed?
- Where do you take the car for maintenance?
- What issues have you encountered with the car since you bought it?
- Have the airbags ever been deployed?
- What has the car been used for, and who has been driving it?
- Who owned the car before you?
Get a VIN check
A Vehicle Identification Number (VIN) check is also called a vehicle history report. It is a great way to know some essential things about the car.
The report provides the car’s ownership history, title blemishes, existing liens, maintenance history, history of odometer or title fraud (if any), accidents, airbag deployments, flood damage, ‘Lemon’ status, among other things. This report also provides an intelligent way to verify the seller’s answers to the questions you previously asked.
Various online VIN check sites can give you the report in a matter of minutes. Just ask for the VIN from the seller over the phone. Find the VIN in one of the following locations:
- on the driver’s side of the dashboard
- inside the driver’s doorjamb
- under the hood in front of the engine
- in the rear wheel well, or
- under the spare tire.
You can also ask the seller to do the VIN check and provide you with details. This way, you avoid incurring the cost of the check. But you bear the risk of the possibility of the seller altering the information on the VIN check report before handing it over to you.
If you are content with the information you get from your initial conversation with the seller, and the VIN check, you can go to see the car.
Things to do when you go to see the used car you want to buy
Test drive the car
Before you put your foot on the gas, with a stranger on the passenger seat, consider your safety. Ask the seller for a photo ID. Take a photo of it, as well as of the car, and email them to a friend.
Secondly, ask the seller for proof of insurance. You don’t want to ride in an uninsured car else the seller could sue you for damages in case you have an accident. If you are a first-time car buyer, especially, this is an important precaution as you don’t have insurance yet.
You can now test your potential new ride.
Pay close attention to the following items:
- Power steering – are there any whirring or cracking noises when you steer to the right and left?
- Are the heater and air conditioning working?
- Are windows and locks functioning correctly?
- Check headlights, brake lights, reverse lights, and signals
- Mileage: check for wear and tear in gas and brake pedals, brake pads, floor matting, and tires. A low-mileage vehicle shouldn’t show much wear and tear. If these parts do show significant wear, there’s a possibility of odometer fraud. This type of fraud is when the odometer is illegally manipulated to show a lower mileage than the vehicle has.
- Inspect stop-and-go performance, highway performance, and cruise control
Test the infotainment system
Experts from SpeakerChampion.com mentions that Automotive infotainment systems have developed from the simple system of a radio receiver, a CD player, and a couple of speakers. Today, sophisticated car audio systems feature high-powered amplifiers, booming subwoofers, Bluetooth capability, navigation functionality, and so on.
You want a car with an audio system that can spice up your driving experience every time you have to use it. The infotainment system is a familiar trouble spot in many modern used cars.
Take time to test the audio system on your prospective new ride.
- Inspect the screen for touch sensitivity. Check how quickly the system reacts.
- Is it pairing with some phones and not with others?
- Can you make a hands-free call?
- Is the navigation working?
Auto infotainment system replacements and repairs can be expensive if done out of warranty. Making sure that the system is working well can save you a great deal of money and time in repairs.
Get the car inspected
Unless you are an experienced mechanic, the condition of a vehicle is a bit of a wild card. You cannot know for sure whether some parts have been well maintained until a professional inspects the car. An inspection can also unearth critical truths about the car. It can show whether the car has ever had in an accident that the driver did not report.
After test driving the car, ask the seller if you can have it inspected independently. Any hesitation when answering this question should ring some warning bells. Don’t let the seller hard sell you on the car.
If s/he gives the nod, find a mechanic you trust to do the inspection. It may cost you a few bucks, but it is worth it if you want to end up with a reliable car.
If after all these steps you are confident that the car is a good deal, you have sufficient information to make a purchase decision. But you are still far from the end of the process. There are several after-purchase things you’ll need to consider.
Things to consider after buying a car from a private seller
Your footwork does not end with the physical exchange of money with the seller. You have certain unique responsibilities when you buy a car from a private seller. Remember you have to handle all the paperwork and documentation.
Here are the things you need to consider immediately you assume ownership of the car:
- Insurance: Before you drive the car away, line up insurance. You must have the mandatory liability insurance coverage appropriate for your state. Mandatory liability insurance is the minimum requirement, but you need other types of protection.
If you had car insurance on another car, you might have some time to arrange for insurance coverage on the new car. Some states offer a grace period of up to 30 days, but it is advisable to have insurance coverage on the new car as soon as possible.
- Registration: You need to register the car’s license plate in your name. In most cases, this process can be completed in the relevant license plate registration offices. You can also do this at an authorized tag agent’s office if it’s more convenient.
In some states, one can pay their registration fees and tax online. The registration authority then sends the plates and registration stickers by mail.
To complete license plate registration, you need the following documents: title, proof of insurance, bill of sale, vehicle safety inspection, and emissions test documents (in some states).
Common car title issues when buying a used car from a private seller
The car’s title is one of the most critical documents you need to have to own a car legally. It states the owner of the vehicle.
What do you do when the private seller doesn’t have a title?
It’s simple. DON’T BUY the car. Since possession of the title is the only way of knowing if the title is clear, one cannot prove that they own the car without it.
If the private seller says that he lost the car’s title, ask them to apply for a duplicate title. You must have it before you buy the car. Both you and the seller have to sign on the title with the date of purchase. Also, record the odometer reading at the time of sale.
If there are other names on the title, other than the seller’s, don’t buy the car unless the other people also put their signatures. It is inherent that the title is clean.
Salvage car titles
A salvage title is an indication that an insurance company has certified the car as “totaled”. This notation means that, at one point in time, the car required more repairs than it was worth. A salvage title may also indicate that the car has severe problems such as corrosion or flood damage.
If a car’s title indicates “rebuilt”, the car has been deemed total loss to the insured. It has also been sent to an authorized rebuilder to make it roadworthy again. While not necessarily a red flag, this indication implies that the vehicle cannot demand the same price as a similar vehicle that doesn’t have “rebuilt” notation on the title.
Most states require that if a car has ever been deemed a “Lemon”, then that fact has to be indicated on the title.
Bill of sale
The bill of sale is an important record of the purchase when you buy a car from a private seller. It should identify information including car year, make, and model; VIN; sale price; date of sale; names and addresses of seller and buyer; and notation of any guarantees or conditions of the car.
In many cases, the seller puts the “sold as is” notation on the bill of sale. This notation indicates that the seller is not making any guarantees, or offering any warranties and that the buyer understands this fact.
Scams to beware of when buying a used car from a private seller
Just like in other second-hand merchandise deals, there is a possibility of being scammed if you are not careful.
Most scams take one or several of the following forms:
- Title washing – it involves altering information on the title or falsifying it entirely to fetch a higher price. This scam is common when a car is sold for salvage value. To avoid falling victim to title washing, have an independent VIN check, which will help to identify whether or not the car has a salvage history.
- Fake Escrow – A private seller advertises a car with a way-below-market price to catch the attention of many buyers. When you ask why the car’s price is that low, the seller gives suspicious responses. They may, for example, say that they have moved, or they are out of the country. They may then try to urge you to accept the price and put a deposit for the car into an escrow account. The seller may even offer to ship the vehicle to you to close the sale.
Another variation is where the seller asks the buyer to pay the agreed price via wire transfer. They take the money and don’t ship the car, or ship one that is not working.
- Curbstoning – A professional car dealer poses as an individual private car seller and aims to sell unlicensed cars for profit. It may be legal in some jurisdictions. However, even though many of the sales are fine, some unscrupulous dealers buy flood-damaged or salvaged cars at auctions. They then try to sell to private buyers without disclosing the truth about the car’s condition.
These car flippers are technically able to alter odometer settings and mask serious problems. They also try to sell title washed cars out of state, hoping that the buyer will only discover the problem when it’s too late.
To avoid falling in the hands of a curbstoner, search for their email address and phone number on the internet. If search results come up with many car ads, they are more likely than not to be a curbstoner. Another way to flush out a curbstoner is to demand service records. Most of them don’t have these records. A VIN check will also almost certainly get you out of any trap a curbstoner may have set.
- The guarantee scam: It’s common for sellers to promise a guarantee from a third-party funds transfer service such as Venmo or PayPal. It is indeed a lie. No third party wants to get entangled in the chaos of guaranteeing used cars.
Buying a used car from a private seller allows you to get great deals if you cannot or don’t want to buy a new car. Hopefully, this article has helped you to gain the right knowledge about the risks to avoid, footwork, inspection, test driving, and after-sale paperwork and documentation to do. You can now start hunting for the car you need.