Buying a Used Car in a Private Sale – Protect Yourself

A few weeks ago I wrote about our less than positive experience with a car dealership. Since then my wife and I have continued to look for a vehicle, and thus far, haven’t been terribly successful. We’ve gone to a few more dealerships, and while none have been as bad as the one I wrote about, most simply aren’t offering what we’re looking for: a good deal on a used car. Lately we started to resign ourselves to just sit back and wait for a deal to show up so that we can pounce on it when it arrives, instead of actively looking so much. I was just settling into waiting longer term when one morning just after I arrived at work, I got an email from my wife saying that she found what looks like a good deal on craigslist. She called the gentleman, and he agreed to meet us after I was done work.

We met up with the seller, test drove the car, and everything looked great. At this point, I hadn’t really thought about what would happen beyond this point, as I figured something would be wrong with the car that would make me want to walk away, but nothing was. So I stepped out of the car, and I froze. To be honest, I didn’t know what to do. How do I buy a used vehicle in a private sale? Do I just write them a check and they hand me the keys? Do I need to fill out any paperwork? Do I pay tax on the purchase?

For most people, this might not be a problem, but for a young couple who has never purchased a vehicle before, buying from a dealership offers at least a sense of security that you can’t get from a private sale. If you’re unhappy with your purchase, there’s a phone number to call to complain to. If you drive it off the lot and experience immediate regret, most dealerships will take the car back if you return it within a day or two. If you’re struggling with understanding financing, or how the car buying process works, you’re dealing with professionals that do this for a living – they can help you. You don’t have any of those services when you buy a car directly from the owner.

So all of this is running through my head as I stand in front of the gentleman who is selling his vehicle. I do what I can to inquire about the origins of the vehicle, about why he is selling the car, and I inspect the vehicle as best I can. The problem is, through the back of my head, there’s this little voice that’s telling me, “It could all be a lie”. The sad, simple fact is: it could be. The seller advertised the car on craigslist, and while he seems very open and honest and straightforward, I just don’t know for sure. I’ve heard stories of cars that were submerged in a lake for a month being fixed up and sold. I’ve heard of friend’s who bought cars, drove them for years before finding out that they were stolen. I’ve read stories about craigslist scams, shady dealings, and all sorts of horror stories from private used car sales.

So coming home that night I did a bunch of research on what I can do to overcome these obstacles. First, one can use a service like CarProof to alleviate most of these fears. CarProof is a vehicle history reporting service. Basically they provide the entire history of the vehicle, including former owners, regular odometer checks, any repairs that have been done, if the vehicle has ever been reported as stolen, a lien check, insurance and accident claims information, the list goes on. If you’re worried the car has ever been in an accident CarProof will tell you. If you’re worried the car is stolen, CarProof will tell you. While the service isn’t exactly cheap, at around $65, it is a worthwhile investment for a purchase that could easily go into the tens of thousands of dollars.

A second important task to take on when purchasing a used vehicle in a private sale is a mechanical inspection. For this, you have a couple of options. You can look it over yourself, you can bring someone with you, or you can bring the car to a mechanic to have a look at the vehicle. We have explored a couple of these options with the car seller, and we decided to purchase an inspection from BCAA, the British Columbia Automobile Association. Essentially, they provide a service where they will meet you at the location of the vehicle and do a 141 point inspection. This will cost about $150, which is certainly not a throwaway amount. It costs enough that you wouldn’t want to do it on just any car you’re looking at, but not so much that it isn’t worth the cost when you’re sure you want to buy a car. While we would have preferred to take it to the manufacturer’s dealership, the seller was hesitant because of time constraints, so we compromised by bringing the mechanic to the vehicle.

Again, like getting a vehicle history report, obtaining a mechanical inspection is a pretty crucial part of buying a used car. It will give you a great overall picture of the state of the car, everything from whether or not the frame is bent, to the amount of life left on the tires and brakes. Not only will this give you the best picture as to whether or not you should buy the car, it can also give you an edge in negotiating the final price of the vehicle, where you can point to upcoming necessary repairs.

These two steps are the best preliminary steps that you can take towards the purchase of a used vehicle. It will give you the full information required to purchase the vehicle, as it will offer you an extensive history of the vehicle, as well as a snapshot of the vehicle’s health at the time of purchase. Based on this information, you can choose whether or not to take the next step towards the purchase of the vehicle, which is what my wife and I are planning on doing soon!

Written by Alan Schram

Alan Schram writes about personal finance and his encounters with it in his everyday life. Alan is recently married and is looking to save money on expenses and reduce his debts.

14 Responses to Buying a Used Car in a Private Sale – Protect Yourself

  1. I have had very good success purchasing privately owned used cars. This being said, I think your concerns about being lied to are valid and (although I haven’t used the service) Carproof sounds like a good idea. Hiring a mechanic is also great advice.

    Before I purchased my current car (1999 Cadillac DeVille) I learned online (I don’t remember where) how to access a computer code that tells what current and past problems the car has had. The readout was on the dash, all in coded language, but the web site told me what to look for. All was well and my car been wonderfully trouble free for three years now.

  2. Great tips here. Thanks for sharing your story. I bought a used car a few years ago and used an online service to check vehicle history. That service alone helped me pass on a few cars with bad history. I definitely like the idea of having someone else close the deal such as the bank or credit union. Flexibility by both parties is key. If the seller isn’t flexible or won’t agree to a mechanic, etc, it’s definitely best to walk away. Added this to my roundup tomorrow. 🙂

  3. buying a car is a big deal and typically is going to be a large transaction. buying in person i would recommend a few things- ask if the person is ok with you taking the car to your mechanic for a through inspection. For $100 a mechanic can give you the answers you need and help set you at easy on the purchase.

    Second is ensure that the title is real and the person has the ability to sign it over to you for a smooth purchase.

    lastly is a new one to me but you have to notify the DMV of a proof of sale. this does mean that you have to pay taxes on the car similar to at a dealership.

    good luck and remember the number #1 thing to follow is your gut instinct.

  4. With an increase in the craze for buying used cars people tend to get a wrong deal. There are many websites such as Craiglist which allow normal people to list their vehicles as a “free listing”. There is no proof of reality about the person listing the vehicle.

    If you want to buy a vehicle then you should rely on the famous websites such as eBay and other dealers website. I always try to authenticate the information provided by the dealer or seller on the listing page before bidding or going for a purchase.

    Just get a whole info about the VIN, location, registration details, price and payment options.

  5. When ever I purchase a car it is usually a private sale either from Craigslist, the newspaper or Auto-Trader. I have come to find that I get the very best deals and I usually just send my mechanic to go look at the car for me. Its a tricky situation but you just have to be prepared. I find it easier to pay my mechanic then to end up with a lemon that will just cost me more money in the long run.

  6. We did all the things mentioned above and bought a 1997 Intrepid with 115,000km for $2000. Two weeks later it was dead. Crank shaft broke. Our two options are to take it to the wreckers or buy a new motor. Do we have any legal protection here? We went back to the people we bought it from and asked to split the difference. Any ideas? Thanks all.

    • If you test drove the car and it was alright, and you then decided to buy and register the car in your name, then any future problems and repairs are your responsibility, Not the previous owners.

  7. How in the world is Hendricks the favorite in this fight?! Condit has more tools than Hendricks, All Hendricks has is that left hand, COndit has excellent ground and striking skills. Condit by unanimous decision

  8. Yes buying a second hand car is really risky. Be conscious when buying an n used car, it should be private. Always buy a used car from a reputed firm or known one. Then the risk will minimum. Before going through this please check the details about the used car.
    Mercedes Repair Woodland Hills

  9. i bought a 2004 montana van and on the way home about 25 km away from where i bought it it overhested and the macanic said it needs 2 neew head gaskits over 1000 dollars i live in moncton new brunswick canada and the man i bought it from is a lawyer and went out of town for 2 weeks does any body know if i have options or any kind of warranty

  10. Remarkable things here. I am very glad to see your post.
    Thank you so much and I am taking a look ahead to touch you.
    Will you kindly drop me a mail?

  11. i I bought a car for $2000 I gave $1000 cash when I picked it up and received a receipt for deposit. I was told by the seller to go get an inspection which I did only to discover there was way more issues then I was told by the seller. I told her that I am not paying anymore for the car. its not worth it. she then told me that she is not signing the ownership over and that she will be taking the car without giving me the $1000 back. is she allowed to take the car back without giving the $1000 back, and if she does what can I do about it. nicole

  12. I have a different problem.
    I bought a motorcycle and transfered title and paid the sales tax. I was very happy. I paid with cash and emt cause that was the easiest way. I didn’t realize that emt is not traceable so I was told by the seller. And since I paid cash and emt that it looks like he was never paid. He feels he can say I forged his signature on the title transfer document and will report it stolen. Then he asked for more cash. I have not done anything yet. Despite feeling secure in the transfer of title initially I feel I should have obtained a bill of sale as well stating payment and no further financial interest by the seller.

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