How to Buy a Car from a Private Seller

Despite experiencing a slight dip in 2022, the used car market remains healthy with an estimated $36.2 million in cars sold yet only $19.1 million of the sales went through dealerships[1]. That means the remaining sales took place privately.

Opting for a used car has benefits such as a lower selling price and a large portion of the depreciation has already occurred. However, finding the right one might be tricky. And once you do, the process for buying it might not be all that clear. If you are set on purchasing a privately owned car, it's worth knowing how to buy a car from a private seller. 

Advantages and Disadvantages of Buying from a Private Seller 

Buying a car from a private seller could have many benefits, though preparing for possible drawbacks is wise. These are some potential advantages and disadvantages that could be associated with buying from a private seller. 

Advantages: 

  • Possible savings. Buying from a private seller may be less expensive than from a dealership. 
  • Time. When dealing with private sellers, time can be to the buyer's advantage. The seller may want to close the deal quickly, which might afford you a good deal. 
  • Common ground. When buying from a dealership, you buy from a business. There are profits and commissions to consider, which may make them less likely to budge on their bottom line. Buying from a private seller versus a professional salesperson, could help level the playing field and may make negotiation easier. 
  • Service history. A private seller might have the entire service history available, including information not normally found on a vehicle history report. The seller may also be more likely to discuss the car's individual quirks, such as a noise during operation or a sticky side mirror. 
  • Priced as-is. Private sellers will likely list the car's sale price. Dealerships might still have other fees to add on that don't form part of the sale price. 

Disadvantages: 

  • Potential mechanical problems. If the buyer isn't aware of telltales when buying a used car, they might end up with a lemon[2].
  • Inspection. If the buyer needs to be certain of a vehicle's quality, a vehicle inspection is crucial to discovering defects that might require costly repairs later. These defects aren't always easy to spot, which makes it imperative to hire a mechanic. 
  • No warranties. There are no warranties or extended service plans with a private sale. There's also no protection under the Used Car Rule[3] when buying from a private seller, meaning all repairs are your responsibility.
  • Reliability of seller. Unlike dealerships, private sellers aren't regulated. This means that it's hard to seek recourse if you buy a car as is from a private seller.
  • Recording the sale. Transferring the title and car registration is your responsibility.

Common Scams when Buying from Private Sellers

Before buying a used car from a private seller, do your homework. Career criminals are known to fabricate scams when it comes to selling used cars. Some of these include: 

Title Scams

  • A well-known way fraudsters aim to scam buyers is through title scams. There are three main ways to commit title fraud: 
  • Title washing: This practice involves counterfeiting or altering the title details in some way, whether it’s removing the salvaged status or simply registering the car in a state that doesn’t require salvage information.
  • VIN fraud: VIN fraud can happen in different ways. The fraudster can swap the VIN number with another car, alter the VIN information, or fabricate a new VIN number. This can conceal car theft, prior accidents, and whether you’re buying a cloned car.
  • Title hopping: Registering a car into your name requires you to pay certain fees and taxes. Some sellers who want to bypass the fees and taxes simply wait for a new buyer and only attend to the transfer after the sale. 

Gift Card Scams

A gift card scam involves a seller asking you for gift cards as payment instead of regular methods of payment such as cash or transfer. They may request the details on the back of the card and the PIN. Then, they might not show up to complete the car sale transaction. Gift cards are virtually untraceable, and the scammer could get away with the cash in two ways. 

The first is that you give the gift card receipt numbers to the seller before taking ownership of the car. Then, they disappear with the gift cards and leave you without a car. 

The second is where you take ownership but realize during registration that something is wrong — for instance, the vehicle is stolen. Then, it turns out the seller is untraceable, and the documents provided have been fabricated. 

Wire Transfer Scam

A fraudulent seller may ask you to transfer money to them through a wire transfer before the deal is concluded as a condition of the car's release. However, before the transaction is concluded, the seller disappears, and you’re out of pocket. Wire transfers are popular as the money is untraceable once the other party withdraws it. 

Urgent or Must-Sell-Now Scam

In this scam, the fraudster has a car for sale, and the deal seems too good to be true. For example, it's a rush sale in a divorce or emigration sale. There might be photos and a description; however, these might be lifted from another ad. For the buyer to get in on the deal, they must pay a deposit to secure the purchase. Once the deposit is paid, the seller disappears. 

Curbstoning

With curbstoning, the meeting place is public, such as in a public parking lot. The car is dressed up to hide any flaws, and the seller disappears without revealing whether there are major defects. The buyer can also be left with incorrect or incomplete documents and, on further inquiry, find out that the car is a salvaged wreck or stolen. 

Ways to Reduce the Risk of Getting Scammed when Buying from a Private Seller

Fraudulent sellers will try their luck. Unfortunately, private car sales form an ideal platform for them. However, you can help reduce the risk of getting scammed. 

  • Try to get as much information as possible. Ask for an address, telephone number and full name. Then, look the information up online to verify its authenticity.
  • Cross-reference the vehicle photo(s) on various sites. Download the car photos and run them through an internet search engine as a reverse image search. Everywhere the photos appear will be listed, and you can use this information to determine if the listing is fake, such as if the photos were taken years prior.
  • See the car in person and test drive it. Inspect as many parts of the car as possible, such as under the hood and the interiors. If there are excuses why you can’t test drive the car, it may be a scam. 
  • Request for the sale to be concluded at the Department of Motor Vehicles (DMV). Once you have the information, such as the vehicle identification number (VIN), you can request a full report at the DMV. Ensure that the information corresponds with the car in question. You can also conduct a National Insurance Crime Bureau (NICB - https://www.nicb.org) search to see if the car was flooded, stolen or classified as a write-off. 
  • Do additional research: Request a Carfax report to see all the publicly available information on the car. It's also worth comparing the sale price to the latest information on Kelley Blue Book (https://www.kbb.com).
  • Don’t pay until everything checks out. You need to be certain that the car is in a reasonable condition and that the seller is who they say they are.

Negotiation Tips 

Once you've settled on a vehicle to purchase, it's time to make an offer. Some ways to negotiate a good deal include:

  • Cash. Offer to pay cash on delivery to knock a percentage off the sale price. 
  • Know the market value. Use reliable sources such as Kelley Blue Book to determine the maximum value and negotiate from there. 
  • Have other cars in line. Let the seller know that you still have other cars to look at. If they sweeten the deal, their car might be the last stop.  
  • Offer a lower amount than you're willing to pay. For example, if the car is listed for $4,000, offer $3,500 and work up to your maximum. 

Documents Needed to Conclude a Car Sale with a Private Seller

A few documents are required from the seller before the car can be registered in your name. These are: 

  • A release of liability form and record of the odometer reading 
  • A completed smog test, required in some states
  • The car title
  • A bill of sale complete with the VIN

Once you have the documents, apply to register the car in your name immediately. If the title lists a financial institution as the owner, the vehicle is financed and there is a lien on it. Ask the seller for a payoff document. Also, ensure the car is listed on your insurance before driving off. Again, the DMV and NICB are great resources for checking the information. 

Financing Options when You Buy from a Private Seller

Private sellers don't offer financing options, so the buyer must approach a financial institution if they don't have the total amount available. Options to consider include: 

Private Party Auto Loan 

While some financial institutions don't offer auto loans on private sales, some do in the form of private party auto loans. Factors that affect the loan include the car's age, mileage and condition. 

Personal Loan 

A personal loan can also suffice if the car doesn't qualify for a private party auto loan or your bank doesn't offer that type of loan. However, the interest rate might be slightly higher than a private party auto loan, as it's unsecured. 

Final Thoughts 

Buying a car from a private seller doesn't have to be a daunting experience. Do your due diligence on the car and the seller to ensure a legitimate sale agreement. When done right, a private car sale can land you a great car at a reasonable price. When you've found a car that meets your needs and ticks all your boxes through a private seller, discuss your finance options with your PNC Bank representative. We offer private party auto loans in many of our local branches. Visit your nearest branch for more details.