How To Buy a Used Car From a Private Seller
Buying a car from a private seller takes more effort than buying from a dealer. Here's how to make things smoother and safer.
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Buying a used car from a private seller can have advantages. Cars sold by individuals usually sell for less than at a dealership. Also, if you want an exact make and model of used car, you might be more likely to find it for sale by owner.
But buying a car directly from a private party is more complicated than using a dealership and will require more of your time. This guide can help you prepare by walking you through how to buy a car from a private seller.
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Where to find cars sold by individuals
Numerous sources exist to find “cars for sale by owner.” Here are some options to consider.
Sites like Facebook Marketplace, Craigslist and eBay Motors can help you find private sellers in your area — or farther away if you don't mind traveling or paying to have a car shipped. On these sites, you can search and filter by criteria such as private seller, make, model, mileage and year. You’re also able to set alerts for new listings that are a match.
Online marketplaces like AutoTrader and Cars.com aggregate cars posted by private parties and dealerships. They tend to have more cars available from dealers, but you can filter for private sellers. Autotrader also takes care of things like scheduling a test drive, payment, identity verification, and titling and registration.
If you aren’t set on a specific make and model, word-of-mouth is also an option. Ask friends and family, or post on your social media that you’re in the market for a reliable used car.
Researching cars for sale by owner
Often, buying a car from an individual means buying from a stranger whose trustworthiness is unknown. And you most likely won't have any warranties to protect you, like you would at a dealership.
On top of that, in some states, private-party car purchases aren't covered by lemon laws that protect people who buy defective vehicles. But there are some steps you can take to avoid regretting your purchase.
Contact the private seller and ask questions
Asking direct questions enables you to get details that might not appear in a listing. It’s also an opportunity to get a sense of a seller’s honesty.
Has the car ever been in a collision or had other damage?
Has the car had any major mechanical repairs?
Will the owner be able to provide the car's service records, which show regular maintenance?
Does the car have any remaining warranty that will transfer over?
Does the seller still have a loan on the car, and with what lender?
If there isn't a loan, does the seller have the car title in their name as proof of ownership?
Why is the car being sold?
Investigate the car’s past
Vehicle history reports are one of the best ways to learn about a car — such as previous accident repairs, odometer readings, number of prior owners, title history and lien information. They can also provide red flags if the information doesn't match what the seller has told you.
Some sites with privately sold cars include a vehicle history report in the listing at no cost. In some cases, a private seller may buy and provide a history report. If not, obtain the car’s vehicle identification number (VIN) and order a history report yourself. Two popular sources are Carfax or AutoCheck, with a single report costing less than $50.
You can also use the VIN to do some limited research at the National Insurance Crime Bureau. Here you can see if the car was ever reported stolen and not recovered or whether it has a salvage title, meaning an insurance company has declared it a total loss.
The National Highway Traffic Safety Administration website enables you to check for past vehicle recalls.
Determine if the car's price is fair
Use sites like Kelley Blue Book or Edmunds to determine how much you should pay for a vehicle. Make sure you're comparing the price to the private-party value.
If the car's asking price seems high, private sellers may be more willing to negotiate than dealerships. It's also worth noting that private sellers won't press you to buy a list of expensive add-ons, such as maintenance and protection plans. So buying a car from a private party may reduce what you pay in more than one way.
Arranging to see a private seller's car
If your research checks out and you're still interested in a car, set up a meeting to see it. A bit of planning can save you time and help make the meeting safer.
Take safety precautions. Ask the seller to bring the car to a public place, and don't come alone. Bring a family member or friend, or at the very least make sure someone knows where you're going and agree on a specific time when you will check in. One suggestion is to ask for the seller's driver's license to photograph, and send the photo to someone who knows where you are.
Do a visual car inspection. Try to meet during the day so it's easier to see as you visually inspect the car's interior and exterior. Look for things like worn tires and gas pedals on a car with very low mileage, which could indicate odometer tampering. Our used car inspection checklist can help.
Test drive the car. Test driving a used car from a private seller is especially important because it’s not likely the car will have a warranty. Driving a car can alert you to problems that might not otherwise be obvious. Make sure to ask for proof of insurance on the car before you drive it.
Negotiate the price. After the test drive, if all goes well, it’s a good time for price negotiation. When you and the seller agree upon a price, ensure it's contingent upon the car passing your mechanic's inspection.
Get a prepurchase inspection. Some issues like flood damage or mechanical problems may not appear in a history report and are more visible to a trained eye. It's worth the several hundred dollars you will spend to have your chosen mechanic look at a car. If the public place you meet is your mechanic's place of business, that can save you time. You can also ask the seller to bring the car's service records to this meeting.
How to pay a private seller for a car
You won't have a dealer to assist with the financial aspects when buying a car privately. If you take out a loan, your lender may provide limited assistance, but it's another task that falls on you for the most part.
Don't pay for the car until you have the car's keys and a lien-free, transferred title in your or your lender's possession. If you have the title and the seller's ID from when you test-drove the car earlier, compare the two to make sure the names match. While not foolproof, this is a way to ensure the seller has the legal right to sell the car.
If the seller still has a loan on the car, obtain the payoff amount from their lender. You or your lender will then be responsible for paying off that loan and obtaining the title from the previous lender.
When the time comes to pay for the car, you have several options.
1. Pay with a private-party auto loan
Not all lenders offer loans for cars purchased from private sellers, so finding one that does can take some effort. However, applying for a private-party auto loan is, for the most part, like applying for any other auto loan. One difference is that private-party auto loans usually have higher interest rates than other auto loans. Also, the lender may require proof of car insurance for the vehicle you’re buying.
2. Pay with a personal loan
For cheaper, high-mileage or older used cars that may fall outside most lenders' guidelines, a personal loan may be your best bet — but it will probably carry a higher interest rate and require a better credit score.
3. Pay by cash or check
Paying with a money order or cashier's check is safer than carrying cash, but some sellers won't accept cashier's checks due to the potential for fraud. (Some may be willing to meet you at the bank to ensure a cashier's check isn't forged.) If you pay with cash, make sure to get a bill of sale with the agreed-upon purchase price as proof of payment.
Using an escrow account is one way to make paying safer. For example, you can put payment for the car into an escrow account for safekeeping, and the escrow company will release the money to the seller when you or your lender has the car's title. If you go this route, make sure to choose your own escrow company, as scam artists have been known to use fake escrow accounts.
Completing the purchase of a private sale car
Taking ownership of a vehicle purchased from a private seller is usually more complicated than buying from a dealership, because you’re responsible for paperwork a dealer typically handles. That is, unless you buy through a used-car platform that handles it for you.
Working with the seller, ensure that registration and title transfer paperwork is complete.
Some states require you to complete a bill of sale along with an odometer disclosure statement.
You will be responsible for paying any sales tax and fees when registering the car.
Check with your state's department of motor vehicles to see what it requires for you to take vehicle ownership. In some cases, it may be faster to meet the seller at the DMV.
