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Maverick Sanchez
Maverick Sanchez

How To Buy A Car With Cash From Private Seller

Buying from an individual rather than from a car dealership has many advantages, though you'll want to do your homework before you buy. In this guide, we'll first talk through the advantages and disadvantages of buying from a private party, then walk step-by-step through the process of purchasing a private party pre-owned car.

how to buy a car with cash from private seller

When you buy and sell cars, there's quite a bit of personal information that needs to be shared. If, however, the seller demands a host of private information before letting you see the car, it should be a red flag. It may be an indication they are trying to steal your personal information, rather than selling you a car.

Most buyers of used cars should only consider buying a vehicle that has a clean title. You should never pay for a car unless the seller can immediately transfer the title to you. Unless you're fully aware of what you're getting into, you should avoid vehicles with branded titles. A branded title can indicate that the car was salvaged, flood-damaged, stolen and recovered, or used as a taxi or police car. If the seller says they do not have a title, they may be trying to hide the fact the car's original title is branded.

It's now time to meet the seller, inspect the vehicle, and take a test drive. You'll want to meet in a public place, and not at their home or yours. More and more cities offer safe exchange zones, which are areas specially covered by video surveillance and monitored by police. If your city doesn't have one, choose a shopping area parking lot or another location with people around. For many reasons, it's a good idea to meet during daylight hours.

After they give you an opening number, counteroffer with a lower amount, backed by reasons you think their price is too high. Your justifications can include the prices of other similar cars, issues that you found on the vehicle history report, or problems you identified on the test drive. Remember, once a seller gives a price, they can't go any higher. Once a buyer gives out an amount, they can't go any lower.

Don't allow a private seller to rush or bully you. Remember, you have the greatest power in the negotiation, as you can always walk away. Sometimes you'll have concrete reasons to do so; other times, you'll just have a notion that something's not right. Listen to your intuition.

Getting the money to the seller can be more complicated with private-party transactions, especially if they still owe on the vehicle or you're taking out a loan. If they still owe money, you or your lender should send your payment directly to the lender to pay off the loan and allow them to release the title. Any funds in excess of their loan balance can be paid directly to the seller.

Many private sellers ask people purchasing cars to pay in cash, which is fine as long as you do so in a safe place and document their receipt of the money with a bill of sale. Some may accept a cashier's check, though savvy sellers will ask to accompany you to your financial institution so they can verify it's not forged. Unfortunately, forgery of cashier's checks is a significant problem.

One of the most significant differences in purchasing a vehicle from a private seller versus a dealership is you'll have to work with the seller to ensure that all of the purchase, registration, financing, and title transfer paperwork is completed and filed.

Car ownership comes with a price tag. We can help minimize those hits to your wallet with unbiased consumer advice on topics ranging from auto insurance to a how-to guide for buying tires and advice on how to make your car last a long time.

Buying a car from a private party is different than buying from a dealership, but the basic steps are the same. You should first research the vehicle models that meet your needs and fit your budget, then search through local listings for the car you want. Once you find it, you can contact the seller and set up a test drive and inspection. You might have the vehicle inspected for mechanical issues or hidden damage with a private seller. You also won't have the option to purchase warranties or other extras.

Before looking at potential vehicles and buying a car from a private seller, a few things can make the process easier such as, nailing down your budget, making a list of must have features and finding state requirements for used cars.

When you buy a car from a private party, your best bet may be to pay for the vehicle yourself. You may be able to get a car loan for a private party sale, but it can be complicated. Also, the terms for private sale auto loans are typically less favorable. In either case, you'll need to figure out how much money you can put down on the car now and how much you're willing and able to borrow. That should give you an idea of your budget for your purchase.

Compare the value of each vehicle on your list to its market value from third parties like Kelley Blue Book. Get estimated values both for the condition as the seller describes it and at least one condition below, e.g., if a seller's description indicates "excellent" condition, get the value for excellent and very good conditions.

Before buying a used car from a private party, have a trusted mechanic check that the vehicle is in good working order. The mechanic may help you estimate the cost of any needed repairs. Use the VIN to get a vehicle history report and make sure it matches what the owner told you. If the owner doesn't want to give you the VIN, walk away from the sale. Learn more about what to look for when buying a used car.

For a fee that can range from $10 to $40, you can order a vehicle history report that might help alert you to potential problems with the car. This report contains information including accident history, damage the car has sustained, open recalls, title history, lien history and service history.

Whether you're buying or selling a used car, you need to make sure to file all the paperwork and close the deal properly. While the laws governing the sale of motor vehicles vary from state to state, the general outline of the deal is similar. For the specific steps, make sure you check with the Department of Motor Vehicles in your state.

As a private seller, you will need to make sure you receive the proper payment for your car and limit your liability (in case the new owner crashes the car right after driving away in it). Below, we take a look at the sales transaction from both sides: the seller and the buyer.

As a buyer, you will have to prove you are the new legal owner of the vehicle in order to register it. In most cases, this means you will have to get the title, often called the "pink slip," from the seller or possibly a bill of sale. With the proper documents in hand, go to your state's DMV or motor vehicle registry, where you may be required to pay sales tax before you receive the new registration, title and (in some states) new license plates.

When vehicles are being sold remotely, you can use an escrow service to facilitate the transaction. The escrow service essentially verifies that the funds are paid and transfers them from the buyer to the seller.

It's unwise to accept a promise of future payment from a buyer, even if it is someone you know. If the vehicle is wrecked, the new owner's motivation to pay you back plummets. You are well within your rights to refuse to float loan payments, and in most cases the buyer will understand and quietly back down.

Limiting your liability: What if someone drives away in the vehicle you just sold and gets into an accident? Can you be held responsible? There are two ways to deal with this concern. First, record the odometer reading, and sign the vehicle's title over to the buyer. Second, in most states, a release-of-liability form can be downloaded from the registry of motor vehicles website. This story has links to the different Departments of Motor Vehicles.

If you want to avoid taking any chances with a private-party sale, there's a safer alternative here on Edmunds. Appraise your vehicle to get an instant offer, which is good for seven days at participating dealerships.

  • Have a smog test performed if required in your state.

  • Fill out a release-of-liability form, including current mileage, and file it with the DMV.

  • Provide maintenance records (if available) to the new owner.

  • Receive payment in cash, by cashier's check or, if selling remotely, through an escrow service.

  • Take the license plates off the vehicle (if required by your state).

  • Remove personal items from the glove compartment and other storage areas.

  • Hand over both sets of keys to the new owner, along with any warranty papers for the car, the battery, tires, etc.

  • Cancel insurance for the car.

If you buy a used car from a dealership, the dealer will handle all the paperwork and register the vehicle for you. In a private sale, the seller and buyer handle the paperwork themselves. While there are many small steps to closing a used-car sale, the big picture is this: You as the buyer need to obtain proof that you purchased the car legally and get a statement of what you paid for it.

If there is a lien on the car: In some cases, the car you are buying might have a lien on it. That means the bank or lender is in possession of the title. Banks often handle this kind of used vehicle sale, so check with the bank to learn exactly how to proceed. Essentially, the seller will need to make sure to pay off the balance of the loan before the car is transferred to you as the buyer. This process might take some time and delay the sale.

One way to deal with this situation is to conclude the sale at the bank that holds the title. The seller can call ahead and ask the bank to have the title ready. Then, when the seller has paid off the balance of the loan, he or she can sign the title over to you.

  • Get a smog test from the seller (if required by your state).

  • Make sure the registration is current. Otherwise you could be held responsible for late fees.

  • Ask the seller to sign the title and record all the information, such as odometer readings, properly. (In some states you might need a transfer-of-ownership document, which is attached to the title.)

  • Have the seller fill out a bill of sale if required in your state. You can show this document to the police if you are stopped right after the sale.

  • Pay state sales tax when the car is registered.

  • Activate or update your insurance policy.


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