Pitfalls of buying a car from a private seller: Buyer Beware!
What this means is that you can probably make a much better deal by going to a private seller to purchase a vehicle. But, there are pitfalls to beware of when buying a car from a private seller… and some of them are significant. Some of the things you need to be aware of include:
- Who holds title to the car?
You need to make sure that the car you’re thinking about buying is being sold by the actual owner. If you don’t, you could even end up paying for a car that you now don’t own… or even worse, buy a car that’s been stolen.
- Title isn’t clear
A private seller could have an outstanding loan on the vehicle. That situation could create a lot of problems for you if you buy it.
- Misrepresentation of the car’s condition or past problems
If the car has been in an accident and repaired, or has other problems, a seller may not tell you the truth about the car’s history. The result of not getting the full story on that car is you buying someone else’s headache.
- Seller may not know about hidden problems
Just because a car has a problem doesn’t mean that the seller knows about it. That’s why you need to do your homework, and have the vehicle inspected thoroughly before you ever consider purchasing it.
- The car has a “salvage” title
This means that the car has been “totaled” by an insurance company in the past. Some people buy totaled cars, repair them, and sell them to others. In some states, a vehicle that has been repaired can have a “washed salvage” title that means it’s been repaired. In any case, a car that has been totaled in the past is worth less than a comparable vehicle that has not been in an accident.
In addition, there are other differences when buying a car from a private seller instead of from a dealership:
- Sales tax is paid by the buyer not the seller
You must pay sales tax at the Department of Motor Vehicles (DMV). The private seller will not pay taxes for you.
- No vehicle warranty is offered by the private car seller
You will need to deal with any warranty and buy it from a warranty company. Also, some warranties transfer when the car is purchased. You want to research this when you’re buying the car.
- Financing is not typically arranged by the private seller
You may find a seller that is willing to “carry the note” and let you make payments to him or her, but that is rare. In most cases, you’ll need to finance the vehicle yourself through a bank or credit union.
- DMV paperwork is handled by the buyer at the DMV
Unlike with a dealer, you must handle all of the transfer paperwork and other requirements with your state DMV.