How to buy a car from a private seller

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You see a car in somebody’s yard with a “for sale” sign on the front windshield. Or maybe the car is being advertised by somebody on a website. Either way, you’re interested.

Keep in mind that buying a car from a private seller – instead of a dealership is definitely a different experience. For instance, car dealerships are required to make sure you drive off the lot with automobile insurance. This is not the case with a private seller.

Additionally, a private seller won’t likely offer extras on the car if you throw in a little more money and won’t offer advice about car insurance, car titles or anything else.

Before you hand over a wad of cash and buy a used vehicle from a private seller, you’ll want to treat the car buying process as if you’re going through a school zone. In other words, when you’re figuring out how to buy a car from a private seller, you want to proceed with caution and go slowly.

We’ve covered everything you need to know to make buying a car from a private seller a stress-free experience.

Steps to buying a car from a private seller

You probably don’t need to be told this – but don’t be pressured into buying somebody else’s car. Sure, maybe they really do have other interested parties, but it is important to be thorough and take your time in making this type of purchasing decision.  

You have important questions about the car you want to buy. Take your time to ask them and go through the steps needed to make an informed decision. Here are the steps to follow when buying a used car from a private seller.

Step 1 — Learn the vehicle history

You’ll want to ask the seller why they are selling the car, how many previous owners the car has had, if there have been any accidents in the car and if there are any known issues with the car.

Ask if the seller has service records or a Carfax, which offers reports on the service (not necessarily every instance of service) the vehicle has had over the years.

Since the seller probably won’t have a Carfax, you can buy one. The Carfax report costs $39.99, but if you start to get serious about making the purchase, it’s probably worth it. If you have AAA, you can probably get a discount – and some AAA members can get a free report every year.

You may want to look at an AutoCheck report, which like Carfax, offers vehicle histories but they don’t have maintenance and service records. An AutoCheck report will run you $24.99.

To get either a Carfax or AutoCheck report, you’ll need to get the car’s VIN (vehicle identification number). You can ask the seller to give it to you; they can find it in several places, depending on the make and model of the car. It’s sometimes on the driver’s side of the dashboard or inside the driver’s door, where it connects to the car. You might also find the VIN under the hood, in the trunk or under the spare tire. Even easier, the VIN is likely listed on the sellers auto insurance card.

You should ask if the air bags have ever been deployed. If they have, the car has been through some trauma and you will want to inquire about that.

Be sure to ask what the vehicle was used for. If the driver has been delivering pizzas or been an Uber for years, that may mean lots of wear and tear and future trips to your mechanic. On the contrary, if an older person has had the car parked in their garage for the last three years, well, then you know you probably have a gently used car.

Step 2 — Test drive the car

You need to test drive the car.

The pandemic has made this interesting, along with every other facet of your life. You may not want the driver’s germs in the car with you, and the driver may understandably not want you to go on a test drive in their car alone.

You’ll figure that out, of course – and probably you’ll both wear masks and maybe open the windows, and that’ll be the end of that. But you definitely want to be careful, pandemic or not

Make sure that people know you’re meeting with this person, where you’re meeting them and at what time. Even better, bring a friend or family member along.

Require proof of insurance and a photo ID of the seller and take pictures of both.

In other words, take all of the common sense precautions that you’d want to take before meeting a stranger.

OK, so now that you’ve shared with the world that you’re taking a test drive with this private seller, what should you do?

Start driving.

You want to really get a sense of what it’s like to be behind the wheel of this car. Test drive on a freeway and on a highway.

While you’re driving, take special note of important things like:

• Vehicle mechanics: Are there any odd noises or vibrations? How does it feel when you accelerate? Does the steering feel good?
• Brakes: Do the brakes feel responsive and reliable? Are there any noises or vibrations when braking?
• Air-conditioner, heater, radio, etc. – Make sure all of these things work as they should. .

If you’re loving it and are sure you want to buy it, you might also want to take it to a mechanic to have it checked out. Yes, it’s a pain in the neck, and it might feel like you’re throwing away money but if you’re going to shell out a considerable amount of money for a used car from an individual, it is important to do your due diligence. You don’t want your new old car to suddenly die on the side of the road in a few weeks (okay, or ever).

To take even more precaution, you may decide to download a mobile mechanical diagnostic tool. There are a number of them that vary in prices.

• Fixd
• CarMD
• Zubie Key
• Hum+

If you get a diagnostic app, you’ll get a sensor, and you could plug it into car’s onboard diagnostics (OBD-II).

You’ll get a code reading and computer diagnosis of any problem the car has.

So… you’ve established that this seller is a fine upstanding citizen, you’ve driven the car, and you love it and want to buy it. Now what?

Step 3 — Get the “buying car from owner” documentation

Getting the paperwork right is important if you want to make sure the car truly becomes yours.

You’re going to need four things before you drive away in your new (old) car: a bill of sale, the title, the registration and car insurance coverage.

• A bill of sale: If you aren’t that organized, and your seller isn’t either, and you two don’t care about details, you might figure, “who cares? Why write out a bill of sale? We both know we’re buying and selling the car.” Still, it wouldn’t be a bad idea. It’s basically a receipt. You don’t want a problem later where you can’t quite prove that you bought your car.

Some things to put on that bill of sale: the car year, make and model, the VIN number, the sale price, the month, day and year the car was sold, the seller and buyer’s names and addresses. The seller may want to add, “sold as is,” and so if the buyer didn’t listen to our advice and take it to a mechanic and the brakes wore out two months later, well, there will be no griping to the seller.

• You’ll need the car title: You not only need this but need to look it over. You want to make sure the seller’s name is on the title, for instance. If the seller doesn’t have the car title, that’s a red flag. He or she could be selling you a stolen car – or maybe they haven’t paid off the car, in which case, they don’t really own the car yet. The lender does.

There is a chance the seller doesn’t have a title but a lien payoff document. That’s fine, but call the lender, just to make sure everything is on the up and up. You want to ask if there’s anything on the title that should trouble you. For instance, if the title has the word “salvage” or “rebuilt” or “lemon” on it, and some titles do actually contain those words, you probably shouldn’t pay money for this car. The seller should pay you to take it away.

• The registration. After you buy the car, get your car registered. But because every state is different, we recommend to call your local DMV and tell them that you’re planning on buying a car from a private individual – and ask if there’s anything you’ll need to do before you make your purchase and how much time you have after you buy the car to get over to the DMV. When you do register, you’ll need to have your car title – and proof of insurance coverage

• Insurance: No matter where you’re buying a car from, you must make sure you have insurance coverage to drive the vehicle home. As you’re probably well aware, it’s illegal in most states to drive a car without insurance. At an absolute minimum, you must have your states minimum liability requirements.

By this point, you should have already spoken with your insurance company to find out what you need to do if you decide to purchase this used vehicle. If you already have car insurance on a different vehicle, it is possible your company will extend a grace period of coverage on the new vehicle so you can safely drive away in it after buying.

What to do after you buy a used car from a private seller

If your current insurance has a grace period, call as soon as you get home with your new car and get it on your policy. (And if you now have an old car that you aren’t driving and have, say, had it towed away, then make sure that comes off your policy.)

And what if you don’t have car insurance? You need to buy the car insurance before you buy the car. Or before you drive your new car, anyway. If you’ve spoken with your agent in advance, you’ve probably already got this lined out so you can call from your mobile phone in the seller’s driveway or wherever you’re parked and get insurance.

If you don’t have car insurance yet, when you do call, you’ll want information handy such as birthdates, drivers’ license numbers and social security numbers for anybody driving the car. You’ll also want that all-important VIN.

What car insurance coverage to get for your used car

Before you hang up the phone or log off the insurer’s website – make sure you have the right car insurance, and that you aren’t over-insured or underinsured.

If this car is one that you’re grateful to drive, but you know it’s not worth much, then you may want to only pay for liability – in other words, your insurance will cover damage that happens to the other driver’s car and pay for others’ injuries,  but not your own car or injuries. Now, on the other hand, if you bought this car for quite a bit of money, and you’d be financially devastated if the car hit a telephone pole tomorrow or you caused an accident, then you probably want collision insurance, which pays for damage to your own vehicle, regardless of fault. You may also want comprehensive coverage, which pays to replace your car if stolen and for repairs needed after flooding, fire, hail or animal strikes. Comprehensive and collision are optional, and both carry a deductible, the amount you pay before your insurance kicks in, and pay out up to the actual cash value of your vehicle.  also covers your car for  comprehensive coverage, so that your vehicle is insured and anybody else you might get into a wreck with.

That’s what it’s there for, car insurance. Nobody likes to buy or pay for car insurance. You aren’t crazy if you want to pay less – or nothing for your car. But car insurance is one of those things that when you need, you will be thrilled that you have it.

Meanwhile, enjoy the thrill of your new car, SUV, truck, moped or whatever you’ve just purchased. If you got a great deal buying a vehicle from a private seller and you found good, affordable car insurance as well, you have had quite a successful day.

Geoff Williams

Contributing Researcher

 

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Geoff Williams is a freelance journalist and author in Loveland, Ohio. He has been writing about insurance and personal finance since the mid-2000s. His work has appeared in numerous publications, including Life magazine, Ladies’ Home Journal, The Washington Post, CNNMoney, Entrepreneur, Forbes.com and U.S. News & World Report.

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