Knowing how to buy a car from a private seller can be a great way to find a rare car or get a good deal–but buyer beware! There are some important things you need to know before you hand over cash for that new set of keys.

It's crucial to know how to buy a car from a private seller as it can save you time and money. But it can also open you up to scams and leave you without warranty coverage.

That’s why

trusted car insurance broker

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Jerry

has compiled everything you need to know about how to safely buy a car from a private seller. And if you’re on the lookout for

car insurance

for a vehicle you purchased from a private party, Jerry can help with that too!

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Buying a car from a private seller: The pros

Buying from a private seller can offer some excellent benefits that you won’t find at a car dealership.

Price

Price is the biggest benefit of buying a car from a private seller. Dealerships have high overhead and their salespeople are experienced negotiators, which can make it difficult to find a great deal.

Private sellers usually have more urgency to sell and, without those overhead fees, can be more flexible with their price.

Since they’re usually not experts in car sales, you might have an easier time negotiating.

Time

Private sellers don’t make their living from selling cars, so they want to make the sale and move on. If you’re ready to make a purchase, you’re likely to find a good price and save some time.

Ease

Going through a dealer tends to mean multiple visits, test drives, financing paperwork, and more. It’s not a simple process and there are lots of moving parts.

In contrast, buying a car from a private party is usually a straightforward transaction. If you know what you’re looking for and you’re armed with the right questions to ask, you’ll find the process easy.

More selection

Dealerships typically sell the latest models from one brand. They may also have a handful of used cars from previous years in inventory.

When you buy a car from a private seller, you have lots of options. Platforms like AutoTrader and Craigslist have thousands of listings from every make and model. New, used, vintage, classic–no matter what you’re looking for, you’ll often find a great selection.

MORE: 7 things to look for when buying a used car

Buying a car from a private seller: The cons

Private car sales also have a handful of risks that you need to be aware of before you start your search.

No warranties

Private sellers can’t sell you a warranty on the car. If the car you’re purchasing is fairly new, you can check to see if existing warranties from the dealer are still applicable.

No financing

Dealerships offer convenient financing. In most cases, though, buying a car privately means paying in cash.

If you need financing for a private car sale and you have good credit, you may be able to secure a

car loan

from your bank.

No "lemon" laws

Lemon laws

are regulations that protect a consumer in the event that they purchase a defective product that doesn’t meet its purported quality or usefulness. These laws apply to cars, too.

If a dealer sells you a car with a big mechanical defect that can’t be fixed quickly, they’re required to replace or refund the vehicle.

But in most states, these laws don’t apply to used cars–and they never extend to privately sold ones.

Potential scams

There are a few major scams to watch out for when you’re buying a car from a private seller:

Curbstoning

Identity theft

Title scams

Fake escrow

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How to buy a car from a private seller

Documents are important to understand when you’re considering how to buy a used car from a private seller. Here are a few key ones you should never forget.

Certificate of title

The

title of the car

tells you who owns it. The seller must own the car outright to be able to sell it to you.

If the seller has financed the car with a third party and is still making payments, this is a big red flag.

A financed car means the seller does not have the right to sell you the car without the permission of the finance company. And if the seller stops making payments, the finance company has a lien on the vehicle and can take it back from you. You need to

find out if the car has a lien

before buying.

Ask the seller to show you the title, and ensure the seller is listed as the owner. If the finance company is listed as the vehicle owner, the seller should be able to show you a lien payoff document.

Even then, you’ll want to call the finance company to confirm that the vehicle doesn’t have a lien on it.

Here are a few other title issues you may encounter:

Salvage titles:

Salvage titles

indicate that an insurance company certified the vehicle as "totaled." It can indicate that the car may have serious issues, such as corrosion or flood damage.

Rebuilt titles:

Rebuilt titles

indicate that the car was deemed a total loss by an insurance company and an authorized rebuilder made the car roadworthy again. While the car condition may be ok, you should expect to pay less than a car that was not rebuilt.

Lemon or factory buyback: indicates that the car was once deemed a "lemon"–meaning it had a significant mechanical defect that could not be repaired quickly. Most states require that this be noted on the vehicle title.

MORE:

Buying a car without a title – what you need to know

Bill of sale

The bill of sale is a sales recipe that documents the transaction between you and the seller of the car. It is proof that the seller transferred ownership of the vehicle to you.

The bill of sale should include:

Vehicle identification number (VIN)

Car year, make, and model

Names and addresses of the buyer and seller

Sale price

Date of sale

Notations of conditions or guarantees on the car–usually "sold as is," meaning that the seller makes no guarantees or warranties and that the buyer understands this

MORE:

How to write a bill of sale

Emissions documents

Some states require smog or emissions testing within a certain time frame before the sale. If this is a requirement where you live, ask the seller to provide this paperwork.

Title transfer procedures

In order to

transfer the vehicle title

, both you and the seller will need to sign and date the title. Sometimes you may also need to record the odometer reading and the sales price of the car.

If there are multiple people on the title of a vehicle, each person must sign.

What if there is no car title?

If the seller can’t or won’t provide the title, walk (or run!) away from the sale. Without the title, you have no way to prove that you own the car.

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Get a VIN check

The vehicle identification number (VIN) is the unique identifying code for a specific vehicle. Getting a VIN check when you’re buying a car from a private seller will provide you with the vehicle history.

This report will typically include:

Title issues

Any liens

Airbag deployments

Ownership history

Maintenance history

History of title or odometer fraud

Accidents

Flood damage

It’s important to get a full vehicle history to ensure there aren’t any red flags and confirm that the information the seller initially provided you is correct.

Pay particular attention to the title status. As a general rule, it’s best to avoid vehicles with salvage titles or that show fire or flood damage.

You can typically get a VIN check online through vendors such as

CarFax

or AutoCheck.

Test drive the car

Just like when you’re buying from a dealership, you can test drive a car from a private seller. It’s a good idea to follow some general safety guidelines before starting the drive:

Meet during daylight in a public place

Ask for the seller’s photo ID, take a photo of it, and send it to a friend

Ask the seller for

proof of insurance

to ensure you’re not about to test drive an uninsured vehicle

Get an inspection

Buying from a private seller means that the condition of the vehicle can be a bit of a wildcard.

Whenever possible, have a trusted mechanic conduct a pre-purchase car inspection. These typically cost around $100–$200 and provide you with peace of mind that the vehicle is in good working order. It can also help you determine what you’re willing to pay for the vehicle.

Try a mobile diagnostic tool

If you can’t get the car to a mechanic before you finalize the purchase, using a mobile diagnostic tool can be a helpful alternative. Apps like Fixd, CarMD, Hum+, and Zubie Key let you run a computer diagnosis using your mobile phone and usually work with 1996 models or later.

The app purchase includes a sensor that plugs into the onboard diagnostics port in the car’s computer. This will allow you to get a diagnosis of any problem straight to your mobile device.

How an inspection can impact the buying process

If the car comes back with a clean bill of health after the inspection, you’ll have the confidence to move forward with the purchase.

But if the inspection notes that the vehicle requires repairs, that’s good to know upfront. Depending on what’s needed, you can either walk away or renegotiate the price.

MORE:

Everything you need to know about Carco inspections

Buy insurance

If you decide to move forward with the purchase, buying insurance should be your next priority.

Auto insurance is mandatory in most states. There are numerous

types of insurance

and minimum coverage requirements vary, so it’s best to check your

state's minimum car insurance laws

to find out what you need.

There are lots of good insurance deals to be found for used cars–but to find the best deals, use

Jerry

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Car insurance quotes online

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Register your car after buying from the private seller

Once the purchase is complete, you’ll need to

the license plate.

You can usually do this at your state’s Department of Motor Vehicles office, or you can pay your registration tax online or by mail and the DMV will mail you the license plate(s) and registration stickers.

To complete your registration, here’s what most states require:

Title

Proof of insurance coverage

Vehicle safety inspection

Emissions test documents

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Questions to ask when buying a car from a private seller

When you’re buying a car from a private seller, it’s ok to ask lots of questions!

Here are some common ones:

Are you the original owner? If not, who owned the car before you?

If the seller isn’t the original owner, it may be difficult to get maintenance information from the past.

Why are you selling the vehicle?

Perhaps they’re buying a new car or no longer need one. If they don’t have a reason, it might be cause for you to dig a little deeper.

What is the mileage on the vehicle?

Watch for mileage that’s unusually high or low given the age of the vehicle, and find out why.

Who has been driving the vehicle and for what purposes?

Stop-and-go city driving is harder on a vehicle than long-distance highway driving.

Are there any liens on the vehicle?

If there is still a lien on the vehicle, the seller will need to pay it off before you can assume the title.

Has the vehicle ever been in an accident?

Recent accidents may not show up on the vehicle history report.

Have there been any major repairs on the vehicle?

Vehicles may need repairs for reasons other than an accident. If there has been major work done to the vehicle, you want to know prior to purchasing it. Confirm with the seller whether any parts of the vehicle have been replaced (e.g., transmission, engine).

Has the vehicle been maintained regularly?

Find out where the seller has been taking the vehicle for maintenance. You can also ask to see the service records.

What issues have come up with the vehicle since you bought it?

If the seller has noticed anything that isn’t quite right about the vehicle, hopefully, they’ll be forthcoming about it.

How to safely buy a car from a private seller

Unfortunately, scams are fairly common with private sellers of used cars. There are a few key ones to watch out for.

Curbstoning

This is when an unlicensed dealer acts like they’re a private seller trying to sell their own vehicle. If the seller has multiple vehicles listed, it’s a telltale sign that they may be a curbstoner.

Identity theft

Identity theft can be a risk when buying a car privately, since you have to provide a fair amount of personal information. Only share what is necessary. A lender may require your social security number, but a private car seller should not.

Title scams

Title scams are common if a vehicle was salvaged, flood-damaged, stolen and recovered, or previously used as a taxi or police car. If a seller isn’t willing or able to immediately transfer the title to you, walk away.

Fake escrow

The fake escrow scam is common with apartment leases and used cars. Here’s how it works:

The seller advertises a too-good-to-be-true low price to generate lots of interest. They typically justify the low price by saying they have moved and are no longer in the country and ask you to deposit the money into an escrow account.

The catch? The escrow company is often fake and there is typically no car.

To avoid this, be sure to choose an established escrow company that operates in a jurisdiction where you can hold them legally accountable.

And if you think a price is too good to be true, it probably is. Keep looking.

How to find cheap car insurance quotes

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Frequently asked questions

Are used cars cheaper to insure?

Used cars are often cheaper to insure than new cars for a few reasons.

Used cars are older and have already depreciated, so they’re cheaper to repair or replace if they are involved in an accident. Generally, cheaper vehicles cost less to insure.

If the used car you’re buying is fairly old and you can afford repairs if you have an accident or other incident, removing

collision insurance

and/or

comprehensive coverage

can help you save on your insurance premium.

The cost of your insurance will vary depending on your personal profile and the make and model of used car you buy.

For instance, you’ll pay less for your insurance premium if you have a clean driving record and own a regular car than if you have a poor driving record with multiple incidents and own a sports car.

What are some red flags to look out for when buying a used car from a private seller?

When you’re buying a used car from a private seller, you are responsible for doing your due diligence. It’s up to you to confirm what the seller tells you and ask the right questions.

Here are some red flags to keep an eye out for:

Seller is unable to provide you with the title–or the vehicle has a bad title

Vehicle has an unusually low price tag

Excessive rust on the vehicle

Odometer is unusually high or low given the age of the vehicle

New or mismatched carpets that could indicate flood damage

Warning lights on the dashboard

Seller refuses to consent to a test drive (or tries to control every aspect of it)

Seller refuses to allow a pre-purchase inspection

There’s an outstanding recall that the seller hasn’t had fixed

If you notice any of these signs, there’s a good chance that you need to do more digging. And remember, if you’re not feeling comfortable, you can walk away from the deal at any time.

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