The Complete Guide to Buying a Used Car From a Private Party

Buying a used car is not a complicated process. Choosing to buy a car used is actually a great way to save money compared to buying a new car.

Although it may take some time to find the perfect used car, it may be well worth the $1,000 or more in savings you get.

In this step by step guide, we will go over ways to search for used cars, what to look for, and how to finalize the car’s sale through paperwork.


The Plan

The first step in the process of buying a used car is to conduct some research and sit down and think about your needs.

The needs you have will affect what car you buy. Take a moment to create a list of things you are looking to get out of a car, such as third-row seating, a large trunk, good MPG, and a towing package.

You should also ask yourself about how old you want the car to be and how many miles you would like it to have. Age and mileage have one of the strongest effects on the price of a used car.

Once you have your requirements, you can begin to search for cars that fit your needs. For this article, let’s say you are in need of a 4 door car with less than 100,000 miles, with a minimum of 20 MPG, under $10,000.

Of course, most of us will not know all the cars that meet these criteria, so searching the internet can be a great way to find more information.

You can search for things such as “Most reliable cars under $10,000” or “Best used luxury cars under $20,000”.

These searches should result in a massive amount of websites offering you lists of cars that meet the search requirements. As stated earlier, we are looking for a 4 door sedan under $10k with 20 MPG or more.

Once we searched online, we found a few cars that fit our criteria: The 2005 Honda Accord Hybrid, a 2007 Honda Civic Hybrid, and a 2010 Toyota Corolla. They all seem like very reliable cars with a high MPG and safety rating, so why not.

Once you have created a list of the essentials you need from a car, you can begin to narrow your search and start browsing for used cars.


The Hunt

In the internet era, there are hundreds if not thousands of sources to find deals on used cars. Some of the top places to search for used cars are Craigslist andA woman stands in front of a series of cars she wants to buy used AutoTrader.

These 2 platforms control a dominant share of the used car marketplace. Craigslist is a very simple, popular, and easy to use tool to buy and sell miscellaneous items, including used cars.

I always recommend consumers use Craigslist to buy and sell cars. Craigslist auto listings are updated every 15 minutes, with hundreds of ads posted daily just for cars alone.

To begin your search, simply go to Craigslist.org and go to the “Cars and Trucks” section. There you can type in search terms such as Toyota Corolla or Honda Accord.

Additional filters will appear to the left of the screen as well. You can input a range of mileage, such as 70,000 to 120,000 miles. You may also do the same with the pricing.

For this example, we simply searched “Toyota Corolla” with a mileage range of 60,000 to 120,000 miles and a price between $9,000 and $11,000.

Although our initial budget was for $10,000, there is always room for negotiation in the sale of a car, so don’t be afraid of searching for cars in a higher price range.

We will go over negotiation later on in this article. The same rules apply to AutoTrader, you can easily filter through various listings to find the car that you want.


Choosing Cars

When looking for a used car, there are a few things you will want to avoid. First and foremost, try to avoid buying a car with a salvage title.

A salvage titled car means that the car was deemed a “total loss” by the insurance company, usually due to an accident, theft, or flood. Instead of fixing the car, the insurance decided to pay the car’s owner the value of the car.

The damaged car is then auctioned off and repaired by an auto body shop to resell. A car must legally be titled as “Salvage” if the insurance company pays the owner the full value of the car.

A salvage title car can never go back to a “clean” title. Many insurance companies also refuse to insure a salvage title cars. Craigslist requires that a seller tell buyers in the advertisement if the car is salvaged or clean title.

Another thing to avoid on Craigslist is working with dealers. Often times, many used car dealers will “disguise” themselves online when selling a car. They say that they are a private seller when they are in fact a dealer.

They take photos like a normal consumer, but they are a dealer. Buying a car from a dealer is not a bad thing, but you could be stuck paying $500 more for a car when buying from a dealer.

A dealer does not need to have a dealership lot in order to be a dealer. To check if an ad is posted by a dealer in disguise, take the phone number they provide and search it on Google and Facebook. Chances are, their old car listings will still show up. If you see the same number selling multiple cars, there is a high chance they are a dealer.

After you’ve decided what your specific needs are, its best to create a list of potential options car you are considering buying. For instance, if you see an advertisement for a car that matches your needs and price point, you can go ahead and “bookmark” the page.

I would even recommend creating a Google Doc or Word Document to list all of the links for cars you are interested in, just to stay organized.


Making Calls

The next step after developing your list is to make phone calls to the sellers.A woman talks on the phone to a seller of a used car When you call a seller, you should ask them questions such as:

“How long have you had the car?”

This question is aimed at seeing if they are a dealer or not. If they have had the car for less than 6 months, either they are a dealer or there is something wrong with the car that could be expensive.

The longer they have owned the car, the more likely they took good care of it.

“Have you done any maintenance to the car?”

This question is geared to see how well the previous owner took care of their car. Ask if they have any receipts to prove their maintenance and repairs.

“Do you have a clean title in your name?”

This goes back to the issue of salvage titled cars. Ask the owner if they have a clean title in hand and ready to go. You would not believe how many cars are listed for sale, but the owner can’t find the vehicle title.

“Does the car make any weird noises or leak any fluids?”

Although it’s common for older cars to leak some oil, large leaks should be avoided. Any motor noise that does not sound “normal” could be a sign that the engine might fail soon.

Sometimes, sellers will say that a car runs great over the phone, only to find out that the car has terrible smoking issues when you see it in person. Never let your guard down when it comes to the condition of the cars motor.

“Is the car currently registered and up to date?”

Often times, buyers will find a great deal on a car only to find out that it has over $1,000 in fees owed to the DMV. To avoid this, ask the seller if the car is currently registered in your state.

Once you’ve taken the time to ask them the questions on your mind, it’s time to establish a meeting time to do a test drive and vehicle inspection. Ask the seller what their availability is for the week and see if you can find a time and location to meet.

It is not abnormal to have a buyer meet the seller at the sellers home. This is actually the most common way these transactions occur. Never meet with a seller in the dark, as it can make it hard to see the car properly.

Seeing a car after 4:30 PM or so can also make it harder to spot cosmetic defects in the paint, as the shadows and shade provide some cover.

If you are not comfortable meeting with a seller at their home, choose a very public location, such as a large parking lot or a local gas station to meet at. You want to ensure that wherever you meet, you will have enough lighting and space to do an inspection of the car.


Meeting the Seller

The day has finally arrived. You’ve spent the last few days talking to random strangers on the phone, and now you’re going to meet them in person! Before you meet with the seller, we advise that you check the value of the car they are selling on KBB.com.

Kelly Blue Book is the number one source to see a car’s value. Print this out and bring it to the deal with you to show the seller. Once you arrive at the meeting location, shake the seller’s hand and start looking at the car.

Some things you should check before buying the car include:

The Exterior Condition

Are there any large body gaps between the cars panels? Is the paint in good condition or does it have damage? These factors will affect the price of the car.

The Interior Condition

Is the upholstery in good condition? Do the seats work as they should? Be sure to test the radio, lights, heater, AC and anything inside the car’s interior.

You want to ensure that everything works before you buy the car. You can use broken items as a strong negotiating point later on

The Motor

Do you see large pools of oil or coolant under the car? Does the engine look like there are any leaks underneath the car?

The Underside

If you live in an area prone to snow, then rust can be a big enemy. Check the underside of the car to ensure that the corrosion is not severe.

The Tires

Are the tires in good shape? Do they have plenty of life left in them? To test tires, all you will need is a penny. Just stick the penny in the tires tread groove with Abe Lincoln’s head upside down and facing you.

If you can see all of Lincoln’s head, then the tires may need to be replaced soon.

Another pro tip to save future headaches is to ask the seller to have the car inspected by your mechanic.

A pre-purchase inspection is offered at almost every single auto repair shop. Call ahead and ask what the costs of an inspection are (usually no more than $100).

A pre-purchase inspection by a mechanic is a great way to find any problems with the car and can save you big in the future.

The inspection should take no more than 1 hour. Try to make it convenient for the seller as well, do not ask them to take the car to your mechanics shop an hour away.

If you have given the car a thorough test drive and look over, you can begin to talk price.


Negotiation

Once you are happy with the car, you can start talking price. There are a few ways you can bring it up.

You can say something the lines of “I know you’re asking for $10,000, but I am ready to make this deal happen today with $9,500”. You should try your best to get as big of a discount as you can.

The seller may counteroffer with $9,700, and this is where you can bring up points from your inspection. In this case, you can say something like “I noticed the car has some scratches and needs some maintenance work done on the motor, let’s settle at $9,600 cash today”.

The seller may counteract again saying that somebody offered him $9,600 and they said no, but these are often lies aimed at boosting the price.

In our hypothetical example, let’s assume that the seller takes the offer of $9,600.


Paperwork Needed for a Private Party Auto Sale

Now that you have secured the price, it’s time to secure the car. Almost every buyer will expect to get paid in cash or by cashiers check, with cash being the preferred method of payment.

You can stop by your local bank and get the cash or check and bring it in an A man stands with a laptop as he looks for used carsenvelope to the seller.

Once you have your cash situation settled, it’s time to do some paperwork! First and foremost, you will need the vehicle’s title.

The title is the highest level of ownership you can prove. If your seller does not have a title with them, ask them to apply for a duplicate title from their states DMV website.

The title will have specific instructions on who needs to sign and date where. Depending on your state, there may be a “Release of Liability” form attached to the title.

Both you and the seller must fill this out, but the responsibility of mailing the release of liability relies on the seller. Before you sign the title, ensure that the car is in their name by comparing it to their photo ID card.

You should also be sure to check and ensure that the cars Vehicle Identification Number, or VIN, matches the one listed on the title. Automakers place VIN numbers on the driver’s side of the dashboard.

You can usually find the VIN number by looking at the dash of the car from outside the car in front of the windshield. IF you are unsure of where to find this number. Simply Google “VIN location 1998 Honda Civic”, and a few guides will come up.

This would also be a good time to triple check that the title is in fact clean. A title will clearly say the word “Salvage”, “Rebuilt”, or “Total Loss” if it has a salvage title. States can vary on what they refer to as a salvaged title, so be sure you know what your specific state writes to describe a salvage title car.

Another document to bring with you is called a “Bill of Sale”. A bill of sale acts as a receipt for you and the seller. It reconfirms that the car has been sold to you.

Do not worry though, a bill of sale is not necessary if you have a signed a title, but it’s always good to have more paperwork.

The seller may also ask you to sign a contract that says something along the lines of “This car is sold as is where is”.

This is not abnormal either, so don’t be worried if a seller asks you to sign this, but be sure to get a copy for yourself as well. Once the title has been signed, you can drive off in your new car!

 


Registering the Car in Your Name

Once you get the car, it’s time to transfer the paperwork in your name. You can do this at your local DMV or at an AAA location if you are a paying member.

AAA processes your paperwork much faster with less waiting time. You will need to bring the title to the DMV, along with the bill of sale.

There will be a fee to retitle a car in the buyer’s name. You will also be charged to register the car in your name. In some states, you will also be charged tax on the purchase price of the car, which can sometimes be a few thousand dollars if you bought something expensive.

The DMV assistant will take the old title and issue you with a new registration slip. You can expect your new title to come in the mail in less than 1 month. You are now the owner of a new car!


Final Note

Buying a car can actually be a time-consuming task. Between finding time to search for listings and meeting with sellers, you could be making a big time investment.

However, for most people, buying a car from a private seller is worth the time cost. You can get a big discount by shopping from a private party rather than a dealer.

If you are looking to buy a new car but are in need of financing, CrediReady can help. Our nationwide network of trusted dealers and verified lenders work with buyers in all credit situations.

Take a moment to fill out our free no-obligation loan inquiry form and start shopping for your dream car today!