MoneyLife

How To Buy a Car From a Private Seller: Tips You Need To Know

By Jacinta Sherris

Wondering how to buy a car from a private seller? Or if it’s even a good idea? Buying a car directly from the owner has its benefits but there are also a few drawbacks. It ultimately comes down to seeing if the pros outweigh the cons and then deciding what’s best for you. 

Use this guide for everything you need to know about the sales process. We’ll go over how to buy a car from a private seller and the most important factors you should be aware of before finalizing the purchase.

How does buying a car from a private seller work?

Buying a car from a private seller means you’ll work directly with the previous car owner. You’re not walking into a car dealership, and you’re not browsing a used-car marketplace. It’s far more personal to buy from a private seller.

You can find private sellers through local ads or online, but ultimately, there’s no middleman. Here are answers to the top questions about how to buy a car from a private seller.

What paperwork is needed for a private sale?

Since private sellers aren’t already vetted like salesmen are, you’ll have to do your due diligence to ensure they’re the rightful owner of the car. This means asking for the right documents and checking the appropriate paperwork. 

Make sure you collect the following information:

  • Car title: This document denotes the rightful owner of the car which will determine whether the seller has the right to sell the car to you. 
  • Bill of sale: Must include the car’s model, make, and year. It should also contain the car’s vehicle identification number (VIN), sale price, and date of sale, as well as the names and addresses of both the previous sellers and buyers. 
  • Emissions documents: Some states require emissions tests before a sale can be finalized. 
  • Vehicle history report: Also known as a VIN, a vehicle history report will provide you with very important information about the car, including ownership history, previous titles, whether there are existing liens on the car, vehicle maintenance history, previous accidents, airbag information, and so much more. 

Should I pay cash for a used car from a private seller?

It’s not recommended to pay cash for a used car from a private seller. Cash is hard to track, and in case the seller has defrauded you, you’ll have a difficult time proving your case if you paid with cash. Better ways to pay for a used car include:

Do you have to pay taxes on a car you buy from a private seller?

You won’t have to pay sales tax directly to the seller. However, some states require you to pay sales tax when you bring the title to the Motor Vehicle Commission and register the vehicle under your name.

How do I protect myself when buying a car from a private seller?

Always check for proper documentation. Never pay with cash, checks, or any other payment method that isn’t easy to trace. Make sure you get to test drive the car before buying it, too.

What to check when buying a used car from a private seller

Follow these tips and suggestions for a smooth and safe car buying experience.

Check titles and other documents 

The car’s title is one of the most important documents throughout the sales process. It contains vital information about who is the rightful car owner. Never buy a used car without a proper title. If the seller claims to have lost it, they can always apply for a new one. 

Test drive

In some cases, documents can be forged. The only way to get an accurate understanding of the car’s condition is by taking it out for a test drive. Never skip the test drive, and never buy a used car from someone who’s hesitant about letting you test drive the car.  

Get an inspection

An experienced mechanic can point out potential pitfalls in the car and catch things that weren’t mentioned by the private seller. Mechanics are also able to identify details that you may have overlooked in your test drive. Although a professional inspection can cost roughly $100 to $200, oftentimes it’s worth it because a mechanic can save you from overspending elsewhere by ensuring you’re getting a fair price for the vehicle. 

Why buying a car from a private seller is beneficial

Buying a car from a private seller has its perks. Take a look at some of the top benefits of buying a car directly from the owner! 

Lower price 

You’ll almost always end up paying less when you work directly with a private seller as opposed to a dealership. Dealerships have more costs to cover, so even if you’re buying a used car, additional fees can pile on, making your total cost very expensive. 

Dealerships also have to pay numerous people after making a sale, whereas private sellers don’t have employees to pay. Dealerships may also charge you additional “documentation” fees, which can reach as high as $1,000 or more.

More room to negotiate 

Private sellers tend to be more open to negotiation. Dealerships need to cover their laundry list of costs, which means they can’t sell a car below a certain threshold. On the other hand, most private sellers are only trying to mitigate their losses, which makes them far more flexible about pricing. 

Faster sales process

Most individuals want to sell their vehicle rather quickly, meaning they have an incentive to finalize a sale faster. 

Drawbacks of buying through a private seller

Despite the benefits, there are several risks associated with buying a car through a private seller. Awareness of potential pitfalls can help you make a better decision. 

No protection

When you purchase a car through a private seller, you’re assuming all of the risks. There are few, if any, laws protecting you in the case of significant defects. If you discover your car isn’t working properly after you buy it, you’ll be responsible for all repairs. You also won’t be able to purchase warranties from a private seller. 

Impossible to cancel the sale 

Some dealerships will allow you to cancel the sale within a few days if you change your mind. This policy is helpful for customers who are slightly unsure about their purchase. Unfortunately, when you buy a car from a private seller you won’t have this option. There’s no guarantee the seller will accept a return if you change your mind. 

Lack of financing

When you purchase a car through a dealership, you can choose between different financing options. However, buying a car through a private seller requires you to pay with the funds in full up front. 

In some cases, you may be able to qualify for a personal loan. However, you’ll need good credit or a cosigner to get a loan quickly. If you’re looking to boost your credit score before applying for a car loan, consider a Credit Builder Loan! 

Get financing to buy a car from a private seller

If you’re worried about not having enough cash saved to pay for a used car upfront, you may want to consider financing options. You might be able to secure a personal loan or a used car from your bank or another lender, but first, you’ll need a good credit score. 

A good credit score will make it easier to get approved and even help you secure a better interest rate. If you’re keen on boosting your credit, make sure to consider MoneyLion’s Credit Builder Loan®️. 

There’s no hard credit check, and you can access up to $1,000 with a portion of your funds deposited the same day. You can use your money to fund your car purchase, registration, improvements, or insurance.Through low APRs and helpful credit tips, MoneyLion’s Credit Builder Loan is designed to help you improve your score. Learn more here!

Sign Up
Sign Up

Build your credit and save

Join Credit Builder Plus to get a loan up to $1,000, credit monitoring, exclusive rewards, access to 0% APR cash advances, and more. Over half of members raise their credit over 60 points within 60 days!

Sign Up