Buying a Used Car from a Private Seller -5 Tips!

Buying a used car from a private seller may seem daunting at first! However, in this article i’ll outline some tips to make the process less challenging. There are certainly several advantages to buying a used car. Buying used allows you to save on depreciation, because a brand new car loses somewhere between 9-11% of its value the moment it’s driven off the lot.  This also allows you to take advantage of the extra savings by cutting out the need to fund overhead from a large dealership.

Buying used cars is a cornerstone habit of the self-made millionaire. According to Dr. Thomas Stanley’s ground-breaking research in The Millionaire Next Door, over 76.5% of first generation millionaires buy their cars used. Check out some other habits of self-made millionaires in this post!  

If you’re looking to buy a used car, buying from a private seller will almost certainly be less expensive than buying from a dealership. You may pay less when buying from a private seller because they don’t have to meet corporate expectations for profit. This will leave more room for negotiation. Without the overhead associated with a dealership, a private party is also much more likely to pass on savings to you as a buyer. A private party may also be more motivated and flexible in their ability to sell, as they may likely simply be freeing up space in their driveway. 

However, when buying a car from a private party, you’ll have to handle all the licensing paperwork associated with the sale. In addition, you won’t have access to financing and any of the extended warranties that are often included when buying a used car from a dealership. 

Here are a few tips to get a great deal when buying a used car from a private seller! 

Tip #1 – Know Your Budget and Make a List!

As you shop for your dream used car, it’s important to keep your target budget in mind. The biggest benefit to buying a used car from a private party is the ability to save a few dollars. A private party will have more room to negotiate with less need to generate excess profit to fund a large dealership. This is a true chance to get a great deal if you remember a few things. As you’re drawing up a budget, remember to include these items, and be sure to add them into your budget: 

• ALWAYS have any potential car inspected by a mechanic. Two of the last three used cars that I purchased were inspected by my neighborhood mechanic. I purchased the car that I’m currently driving from a mechanic. The mechanic was able to verify the general condition of the car and let me know about any potential repairs that they might anticipate. For example, I was considering a 2004 Jeep Cherokee to a local mechanic who verified that the car looked fine, but that this particular model was heavily prone to axle wear and tear. With a repair cost of $2000+ I passed on that car!  
• Ask for service records – a savvy car owner will keep hard copies of these records, or will be able to request them from the dealership or mechanic.
• Request a Carfax vehicle history report – This will let you know whether or not the car has been involved in any accidents. 

REMEMBER – You will also need to pay tax on the declared purchase price of the car and also additional fees for the title and licensing. Remember to add these into your budget!  

Tip #2 – Gather Information on Your Target Car 

Know your desired make and model. When buying a used car from a private seller, you will need to be very specific in your desired car. While you might be tempted to splash out on a fancy set of wheels, it’s also important to know the true cost of your desired car. Check out Edmunds.com Cost to Own calculator that will give you the approximate yearly cost to own based on make and model, including all anticipated repairs https://www.edmunds.com/tco.html

Tip #3 – Research Cars for Sale in Your Area

In this step, you go on a treasure hunt. Check out local sites like Craigslist or Facebook marketplace. However, beware of car dealerships posting fake “private party” listings. ALWAYS request a full vehicle history report. And as you start looking at cars, be sure to check out Kelley Blue Book to get an idea of a fair purchase price for the car.  

Don’t rule out literally finding a car on the side of the road. Many private sellers looking to find someone to buy their car will simply put a “for sale” sign in their windows. Don’t cause an accident to take note of a car that you like! However it always pays off to keep your eyes open on the road.

Tip #4 – Test Drive and Get the Car Inspected 

Go visit your desired car! Take it for a test drive or have someone you trust drive it for you. Make sure you thoroughly inspect the car yourself as well. Don’t be afraid to get under the hood. Also remember to check the oil level. Make sure this is a car that you can picture yourself driving. 

It’s always a good idea to go with a friend or family member, especially if you’re traveling to someone’s private residence. As always, use common sense. Try to go during daylight hours as this is both a better setting to inspect the car and safer overall. Don’t travel to areas that seem suspicious and always tell someone else where you’re going. 

You may need to check out more than one car before you find your dream set of wheels, but in the end, the most important thing is that you have a car that fits your needs. 

Tip #5 – Negotiate the Sale and Close the Deal

This is the step where the rubber meets the road, so to speak. Once you’ve researched the car and know that you’re getting a good deal, it’s time for you and the seller to agree on a good price. Once you agree on the price, the seller should sign the title over to you.  You will also need proof of insurance on the car. 

After they have signed the title over to you, you’ll need to take the title in your name to the Department of Motor Vehicles or Motor Vehicle Commission in your state. The documents you’ll need to register the title in your own name may vary from state to state, however they generally include the following: 

• Title in your name 
• Bill of sale with the purchase price
• Odometer disclosure statement
• Proof of Insurance 

Keep in mind that you will also need to pay an additional fee for the title in your name and the licensing fees, as well as tax on the purchase price of the car. Remember to add these into your budget!  

BOTTOM LINE

Buying a used car from a private party may require a bit more effort on your part. However, it’s a great opportunity to save extra money if you’re careful to enlist the help of a mechanic. In the end, the savings may well be worth the extra effort!