Buying a car from a private seller can seem like stepping into the unknown, but understanding the process upfront may help avoid wrong turns and enable you to secure a vehicle you’re confident with.
How to buy a car from a private seller
• Where should you start when you want to buy a used car? Online is the best place, according to the Federal Trade Commission (FTC), a government body looking out for consumer interests. Research vehicles to find out what’s best for your needs and your budget.
• Once you’re shopping for vehicles and find a model that you are interested in, there are some further points to consider. Check the potential expenses of vehicle maintenance and running costs, says the commission. You should also know the car’s market value before negotiating the price with the seller. That information can be found in the National Automobile Dealers Association’s Guides, Kelley Blue Book and Edmunds. See if there are any recalls on the vehicle, too, cautions the FTC, by visiting safecar.gov, or calling the National Highway Traffic Safety Administration on 1-888-327-4236.
• When inspecting a vehicle, think about using an inspection checklist that provides specific points to look out for and evaluate. These are available online and from magazines and books.
• You might want to get a mechanic to inspect the car as well. If this reveals the need for repairs, they can be taken into account when negotiating the vehicle’s price, says the FTC.
• Test-driving the vehicle in different situations and conditions, like on the open highway and in traffic, may help. “This is your chance to see how the vehicle performs and whether you can detect any problems with its drivetrain, steering, brakes, or other important systems,” says Consumer Reports, a magazine run by a nonprofit organization.
• Bear in mind that buying a car from a private seller is typically on an “as is” basis. “Private sales are not usually covered by the ‘implied warranties’ of state law,” states the FTC. A vehicle may be covered by the manufacturer’s warranty or a service contract purchased separately, but these might not be transferrable to another owner, so ask to review these documents before buying the car, the FTC tells consumers.
• Learning about the vehicle’s history may also help you decide whether to go ahead with a purchase. Consider starting off by talking to the owner about it and asking to see the service and maintenance records.
• Get an independent vehicle history report too, advises the FTC. They’re available from a range of sources including databases like the National Motor Vehicle Title Information System, and National Insurance Crime Bureau. Another option is using an online company, which typically gives you the option to search for a vehicle by entering its vehicle identification number (VIN) or license plate and state information.
Buying a used car from a private seller with financing
When buying a car with the help of financing, check your credit history first say the FTC and Consumer Financial Protection Bureau (CFPB). Get copies of your credit reports to check for errors that might limit your access to credit or lower your interest rate, if approved, advises the CFPB.
Then shop around for financing to compare lenders and potentially reduce your costs. Apply for financing with lenders that accept applications for private-party auto loans. If your credit is below par, there may still be options.
* “Bad” or “Poor” credit generally is considered a FICO score around 600 and below by sources including the Consumer Federation of America and National Credit Reporting Association (reported by the Associated Press), Bankrate.com, Credit.com, Investopedia, NerdWallet.com and others. The Congressional Budget Office identifies a FICO score of 620 as the “cutoff” for prime loans. FICO scores are not the sole factor in lending decisions by RoadLoans.com and Santander Consumer USA.