If you decide to purchase a used vehicle, consider the benefits you enjoy when you buy a car from a private seller. Not only can you skip a car salesman’s practiced pitch and dealer fees, but you and the seller can build rapport and get the deal done quickly.
The downsides when you buy a car from a private seller may be some administrative confusion. You may not be clear about how and when to submit the transfer of ownership documents. Dealing with licensing, registration, taxes and insurance can seem overwhelming, but we’ll make it easy for you.
10 steps to buy a car from a private seller
- Contact the seller.
- Check the title.
- Check the vehicle identification number (VIN).
- Get vehicle inspections.
- Seek financing pre-approval.
- Shop for insurance.
- Sign a bill of sale.
- Transfer the title.
- Take possession of the car.
- Finalize registration.
Just follow this 10-step outline for a successful private car sale.
1. Contact the seller.
A private car sale typically starts with a for-sale listing on sites such as Craigslist and Autotrader.
Reach out to the owner for specifics on the vehicle, including its current condition, mileage, accidents and the reason it’s being sold.
If you’re still interested in the vehicle, meet the owner for a test drive in daylight. You might also bring a friend along to be safe.
2. Check the title.
If you buy a car from a private seller, you’ll have to transfer ownership to your name with your state’s Department of Motor Vehicles (DMV). So, find out who owns it now by asking to see the car’s title.
If it squares with the seller’s name, your path to buying the car just got clearer. Conversely, if you see a third-party financing company, that’s a sign that the seller may not fully own the vehicle, and therefore has no right to sell it. And if the seller doesn’t have a tile, simply walk away from the deal.
Other title notations that could change your mind or your offer include:
- Salvage title: This title indicates if a car was declared “totaled” by an insurance company. This means that its damage cost more to repair than the car was worth.
- Factory buyback: The so-called “lemon title” indicates that the automaker once offered to buy back this make/model as a lemon.
- Rebuilt: This title designation indicates that a vehicle was totally rebuilt to become functional.
3. Check the vehicle identification number (VIN).
Like the title, checking a car’s VIN can make or break your sale. You can order a VIN report from vendors such as Carfax and AutoCheck.
The report shows the ownership history of the vehicle, existing liens, any instances of odometer or title fraud, airbag deployments and flood damage.
4. Get vehicle inspections.
Once you and a private car seller discuss terms, it’s time to inspect the vehicle. Use your own mechanic or auto repair shop, not the seller’s. Pre-purchase inspections may cost in the range of $100 to $200, but some shops may provide them for free. Some states require you to have an emission or smog test within a certain time frame before buying a vehicle.
5. Seek financing pre-approval.
Although most private auto sales are cash, if you’re going to finance a vehicle, now is the time to get pre-approved. It’s also a reminder to double-check that there are no existing liens against the car (you’ll find them listed on the title). If there are, the seller must pay them before you agree to seal the deal.
6. Shop for insurance.
And if you hope to sign, pay and drive away, you’ll want to contact your auto insurance agent and have them add your new vehicle to your existing coverage so you’re safe to drive it home.
However, most states give you up to 30 days to get auto insurance coverage for a new vehicle.
7. Sign a bill of sale.
Finally, to complete the transaction, you and the seller will sign a bill of sale. It should include the year, make and model, odometer reading, VIN, sale amount, date, names and addresses of the buyer and seller and any guarantees.
Even if your guarantee is the most popular sign-off, “sold as is,” this relieves buyer and seller both from any further responsibilities to complete the sale.
8. Transfer the title.
In preparation for your new title, you and the seller should both sign and date the existing title or title transfer form. If you choose to forego a bill of sale, it’s also a good idea to include an odometer reading and sale price for the DMV’s use.
9. Take possession of the car.
Once the transaction is complete, collect the signed title and bill of sale, the owner’s manual, if any, and all spare keys and hit the road in your new used car. Once home, however, three post-sale chores remain to make your new car street legal.
10. Finalize registration.
Visit your local DMV to present the old title, your sale documents, and any required emissions tests to officially own the vehicle. As part of retitling, you may also have to pay state sales tax on the purchase.
While you’re at the DMV, you may also register your new car’s license plate(s) by presenting your new title, proof of insurance coverage and required vehicle safety inspections and emissions tests, if any. You can also register for a fee at tag agent offices, online or via the U.S. Postal Service, which will deliver your new plates and registration stickers to you.