How to Buy a Car from a Private Seller and Avoid a Lemon

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New Car?This post is from Elle at Couple Money.

Last summer my husband and I had a beautiful baby girl and everything changed (for the better). In preparation for her arrival, we’ve created a baby fund, changed the guest room into her nursery, and increased our life insurance coverage should something happen to use. We still have some items on our to do list that we need to complete this year to give us some peace of mind.

One item on our list that we hope to cross off in the next few weeks is buying a family car. Our current cars have served us well over the years. However, neither one of them can accommodate everybody (plus baby gear) comfortably. We were planning on buying another car before the baby arrived, but postponed it to take care of more directly baby related financial goals. Now we’re ready to go with our car replacement fund full and we’re looking for a deal!

Casting a Wide Net for Our Car Hunt

We’re looking everywhere to find a reliable car and deal from asking our friends and family to look at their network for anyone selling their cars, checking out the inventory at the local dealerships, and scouring craigslist and ads in our area for private sales that may give us a steal.

We’ve bought cars using those methods before and have done a decent job finding deals. While our family and friends feel comfortable buying used cars from dealerships or from a trusted friends, many of them are skeptical about buying a car from a private seller. They worry that too many lemons are out there and they don’t want to get stuck with one.

While it is possible for someone to grab a lemon from a private seller, you can become a savvy buyer who buys a peach of a car and save thousands of dollars in the process. I share what has worked for us along with tips from others who had success with buying a car.

Know What Car You Want

When you have the money saved and you’re ready to shop, take a moment to narrow down what makes and models you’re looking for. Don’t just say you want a car with good gas mileage or body style. come up with a list of no more than 3 makes and models you want to purchase.

There are a ton of ads on Craigslist and with the local paper. It’s all too easy to miss out on fantastic bargains because you’re looking at ads on cars you don’t really want. Save yourself from getting a headache and have 3 models in mind.

Another reason you want to be specific is that you’ll become an expert in the car you want fairly quickly. You know what is a fair price and what isn’t based on the others you’ve seen and/or reviewed. You can quickly spot possible deals by checking out the ads and you’ll know who to call and who to skip.  If you’re pressed for time yet you still want to shop on Craigslist, there are free services that can send you emails when cars that meet your criteria show up.

Create your list based on your personal taste and from reliable sources like Consumer Reports who provide yearly lists on the most reliable used cars on the road. This will help you reduce your chances of getting a car that will eat your wallet with car repairs.

Sorting Through the Car Ads

In general, the more information a seller shares on the ad, the better it is for you. Hopefully besides sharing pictures and the basic information (year, make/model, and mileage), the seller saves time on both sides by giving more background on the car. If not, you may have to call and ask some questions.

When reviewing car ads, don’t get too hung up on the year, rather double check the mileage, which can give you an idea of the wear and tear on the car. I’ve seen a difference of tens of thousands of miles on cars from the same year on craigslist.

Questions to Ask the Seller on the Phone

Before you waste your time and gas money, give the seller a call and ask some questions to help you avoid buying a lemon.

  • Are you the original owner? If not, how long have you owned the car?
  • Why are you selling this car? You may find that you’re in a stronger bargainning position than you thought.
  • Has the car ever been in an accident? Big or small, you want to know.
  • How many miles does the car have (if they didn’t put it in the ad)? If the seller’s car has higher than average mileage, ask why.
  • Do you have maintenance records? You want to know if they’ve taken care of their car.
  • Did you smoke in the car? Smoking damages the interior over time and if you have respiratory problems, you can avoid getting into a car that can aggravate it.

You’re not looking for perfect answers per se, you’re trying to get an idea of how attentive this owner was with their car and whether or not it’ll be a good fit for you.

Getting a Deal on a Car  from a Private Seller

Now’s the fun part – it’s time to go and start test driving the vehicles you’ve marked as deals. Here are a few things to keep in mind during the home stretch of the car hunt.

  • Contact seller to schedule a time to come over to inspect and do a test drive.
  • Write to the VIN number. Look up the VIN# with CarFax to make sure the vehicle’s history is clean.
  • Get an expert opinion. If you’re not a car mechanic, ask the owner if you can take it over to a local shop. Besides catching potential big problems, your mechanic’s report may give you a way to negotiate a lower price to cover minor repairs.
  • Compare options and make an offer. Review the price against Kelly Blue Book and other resources. If you still want to purchase the car, contact the seller and make a fair offer.
  • Buy and transfer. If the seller accepts your offer (or counter offer if you negotiated a bit more),  visit your state’s DMV site to see what you need to complete transfer of ownership. To pay the private seller and get the title notarized, we met them at our bank.

As you can see it can take a bit of time, but it can be well worth the effort.

I’d love to hear from you about your car hunts. How many of you are purchasing a car this year? What big features are are you looking for? any specific models you’d like to buy?

(Photo: kevinco2011)

{ 12 comments, please add your thoughts now! }

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12 Responses to “How to Buy a Car from a Private Seller and Avoid a Lemon”

  1. Matt says:

    This is a great article, paying the $45 to get five Carfax reports is well worth it and can save a lot of hassle if you ask for the VIN number before seeing the car.

  2. Modest Money says:

    Very good tip about narrowing your search down to 3 models. That way you are looking for a vehicle that will meet your needs and not settling for some other car that you know little about. When my ex was looking for a car, she already knew exactly which model she wanted. So it really became easy to compare each option. Also when we went to go check out those cars, we knew exactly what parts of the car needed to be checked a bit more. As a bonus, you might end up finding hidden gem ads that didn’t use many keywords other than the vehicle’s make and model.

  3. Jim says:

    I just went through buying a used car myself. All went fine with one surprise. Here are my things to check:
    1)Carfax without a doubt
    2)Pop the hood check for any discoloration in parts. A different color may indicate the car had damage, a flood, etc.
    3)put finger in tailpipe – if sticky, car may be burning oil…not good.
    4)Definitely take to mechanic. If the owner doesnt want that, then they are hiding someting
    5)Be prepared for SALES TAX when registered. In NYC i got killed with unexpected tax/fees. You should download the forms first, because you may be able to save money by having the owner state the price of the car rather than DMV telling you the fair value of car. I could of saved $900 had I known…. CHECK THIS

  4. PawPrint says:

    I think taking the car to a mechanic is a great idea. Howevever, I’m unclear how you do that with a private seller. I’d be wary of letting someone I don’t know take my car if I were selling. So does the seller come with you, or do you leave some kind of collateral?

    • Matt says:

      I know one of my friends took a mechanic with him to look at a car, I don’t know if thats possible for you.

  5. Elle says:

    Thanks for the comments and thanks Jim for the sales tax tip.

    Pawprint: The seller would ride over to the nearest reputable mechanic shop for the look-over. Many sellers are alright as long as they can tag along to make sure everything was on the up and up.

  6. scdavid says:

    Great article. Thanks Jim. I’ve been wondering about this process and the best way to go about it.

  7. Shirley says:

    This article was both timely and helpful to me. Here’s another online place to decode the VIN number.

  8. Matt says:

    Things this article doesn’t mention:
    Who has the title?
    How to buy/sell a car that is still financed?
    What happens with your tags if you sell your car?
    How is the buyer planning on purchasing the vehicle?

    I was able to sell my used car to a woman on Craigslist with relatively little hassle. Here’s how:
    When I bought my car new, I opted for the extended warranty. It came with a logbook, where I recorded every time I went in for maintenance at the dealership.
    When I was looking to sell it, I looked up the Bluebook price for a pristine model and looked at what other used cars with my year/make/model were going for in the area.
    I then took the car to CarMax to see what they were willing to give me. It did have a few dings on it, but they low-balled me by at least $3,000… $6,000 less than what they were selling a clean model for.
    I put an ad on craigslist at exactly what I owed on the car (since that was all I was looking to get) and responded to a few that seemed real/legit. My ideal buyer was someone looking for a quality car and willing to pay a couple thousand below what CarMax and used car dealers were offering.
    I responded to someone and agreed to meet a her in the parking lot of the local Wal-Mart… well-lit and busy. We traded drivers licenses and she test drove it with me in the car. I showed her all of the dings – which she didn’t mind them at all.
    Afterwards she said she wanted to make an offer to buy my vehicle at the advertised price. I explained that we would have to be patient to work things out with my credit union – who owned the title, which she was okay with because she had to work things out with her bank, USAA. She gave me her ticket to the ACL Music Festival that weekend as a good faith measure to make sure I didn’t sell the car to anyone else.
    Her bank needed some information about the vehicle (like the VIN number, who owns the title and where to send the payment to). I got that information from my car and credit union. Because it was USAA (the largest bank in the country), the credit union (or I) was worried about the payment not going through.
    Everything got processed within the week. As soon as it posted, I drove to her house to drop her car off and she kindly drove me back to my house.
    My credit union mailed her bank the title.
    The end.

  9. Elle says:

    @Matt Great questions. Guest posts can tackle so much. Thanks for sharing your take on it. i think it’s a explanation of the process.

    For us, we only buy cars where the owner holds the car title. not only does that reduce the hassle of paperwork, but it means we have more wiggle room with negotiating price.

    Someone that still owes on their car is tied to a certain amount. if they bought more car than they could afford, it is quite possible that they are underwater on their loan, which means the price is higher than KBB value.

  10. Thomas says:

    We are looking for a reliable car that willmy wife is sick and needs to
    Get to the doctors .she has a blood clot in her head,also she,s a diabetic . And she fell 5MONTHS AGO AND NOW HER HANDHSA

  11. Sofia says:

    Thank you for the tips. I just got my license last year and i’m planning to buy my own car now. I just didn’t know what to pick.

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