Tips on How to Save When Buying a Used CarAugust 19, 2015
When you buy a used car from a dealer, you can’t help feeling like he has the upper hand. Auto dealers know their business, and you can bet they’re going to make a profit. It’s tempting, therefore, to buy a car from a private seller instead — no overhead, no taxes, no hassle. But is it safe? Here are some tips to help you successfully buy a used car from a private seller.
Tip #1: Don’t rush when you’re buying a used car.
The more time you spend looking, the better your sense of the market value of a particular make and model of vehicle. First, read our Car Buying Guide to learn what sort of things you need to keep an eye out for. Once you’re ready, hit the market.
Craigslist is a common place for private sellers to advertise used cars, but it’s by no means the only place to find your dream ride. Sites such as AutoTrader.com feature online tools to search and compare vehicle listings from both dealers and individual sellers. eBay Motors offers Vehicle Purchase Protection, which gives buyers up to $50,000 of protection against certain types of fraud.
Tip #2: Research the car’s history.
Unfortunately, you can’t trust the seller’s assurances that the car was coddled all its life. Buyers often discover — too late — that a vehicle has been damaged by flood, patched up after a major collision or even salvaged from a junkyard.
Get a vehicle history report from a company such as Carfax that includes details on past ownership, service and mileage. Carfax will even estimate the car’s value, based on its assessed condition.
Tip #3: Pay for a mechanic’s assessment.
If you’ve found a car you love that looks new and drives smoothly, it may seem like too much trouble to get your mechanic to examine it. Don’t skip this step! Ask the seller to bring the vehicle to your (not his) trusted mechanic for a thorough inspection. Or, you can use a mobile car inspection service, like Carchex. Mobile inspection can be particularly valuable if you’re planning to buy a car from a distant seller, sight unseen. Learn how to pick a good mechanic.
Tip #4: Dont take a chance on the title.
Sometimes you may see a vehicle listed for far less than its Blue Book value, because the seller doesn’t have the title. This is not a bargain you should make, because having a title is vital. A title is a legal document that establishes the owner of a vehicle. Without it, you don’t technically own the car — even if the keys are in your pocket.
States do permit vehicle owners to apply for a replacement title if the original is lost or destroyed. Don’t take on this responsibility yourself; let the seller obtain a new title before the car is sold. Otherwise, you may find yourself the owner of a salvaged or stolen car.
Tip #5: Check for liens.
A lien on a vehicle title means that a third party has a financial stake in it. Most often, the lien is held by the originator of the car loan until the loan’s paid off, but a vehicle lien may also be held by other creditors. The lien must be paid before the title can be transferred.
When you’re buying a used car from a private seller, there are a few different ways to research liens. Ask to see the title, which should state clearly if there’s a lien attached. You can also get the Vehicle Identification Number (VIN) and call your local department of motor vehicles to find out if there are any outstanding liens. Don’t trust the seller to give you the VIN; copy it down yourself.
Tip #6: Use an escrow service.
An escrow service can benefit both seller and buyer when you’re purchasing a used vehicle from a private party. How does escrow work? The company will hold the buyer’s funds in reserve until he or she gets the vehicle and title. Escrow also ensures the buyer has real money to spend and isn’t trying to scam the seller. There is a fee for escrow services, but you may be able to split it with the seller.
Tip #7: Obey local laws governing car sales.
Purchasing a used car isn’t as simple as buying a coffee table. Your state laws may require the seller to get an emissions test for the vehicle and/or an odometer disclosure statement form. A handful of states require the title to be notarized when it’s transferred. In other states, you need a bill of sale. Your local DMV can give you the list of requirements.
Car Buying Guide
Looking to buy a car? We’re here to help. Our Car Buying Guide will help you compare all aspects of the car buying process – price, performance, reliability and more.