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Should You Buy a Car from a Private Seller?

Buying a car is exciting. It’s also a significant financial commitment. When purchasing a vehicle from a dealership, in most states, there are certain protections in place to prevent you from buying the proverbial “lemon.” The same does not hold true, however, when you buy a car from a private seller. With a private sale, you purchase the vehicle “as is.” This means if the car breaks down a week later, that’s, unfortunately, your problem — not the seller’s.

Below are some steps you should take to ensure a good experience when buying a vehicle from a private seller.

1) Get the Car Inspected by a Trusted Mechanic.
Paying a mechanic to review the vehicle before making the purchase is a crucial step you should not bypass. It’s a small investment that could save you thousands of dollars down the road.
When having the vehicle inspected, go to a mechanic or dealership you trust – not someone that the seller recommends. You want an honest estimation of any problems with the car and any repairs that may be necessary. Doing so may also provide you with more negotiating power with the seller if the mechanic identifies potential issues.

2) Make Sure the VIN on the Vehicle Matches the VIN on the Title.
VIN cloning is a growing problem and involves car thieves replacing the VIN on a stolen car with that of another vehicle. If it is determined later that the vehicle was stolen and the VIN cloned, the authorities will return the car to its rightful owner, and you may be stuck with the loan.
Purchasing a CARFAX Vehicle History Report on the vehicle is an easy and affordable way to ensure the VIN matches the car you’re preparing to buy. In addition, most DMV offices can assist with verifying the VIN of a vehicle. See below for information about getting discounted or free Carfax reports through the Credit Union.

3) Verify the Odometer Reading.
Odometer tampering is fraud, and most states provide protections to consumers that are victims. Luckily, if you completed steps 1 and 2 above, you should be well protected.
First, when a mechanic inspects the vehicle, they should be able to tell if any odometer tampering took place. Likewise, they can usually tell by the vehicle’s condition whether it matches the miles displayed.

Second, you can use the Carfax report to verify the latest odometer reading from the car. You may order Carfax reports through the Credit Union at a discounted price compared to pricing direct from Carfax. If you finance the vehicle through the Credit Union your first three Carfax reports are provided at no charge.

4) Set Aside Funds for Taxes, Tags, and Title Fees.
When purchasing a vehicle from a dealership, the taxes, tag, and title fees will typically be taken care of for you by the dealer. However, when completing a private sale, you will be responsible for completing these tasks. Make sure you budget extra funds to cover these costs – especially sales tax, which is often overlooked by buyers.
In addition, make sure you contact your insurance company before making the purchase. You need to know precisely how the car purchase will affect your insurance costs and your monthly budget.

5) Stay Safe During the Transaction.
If you’re buying a vehicle from a private seller, it’s best to meet and inspect the car at a public place and during the day. It’s strongly encouraged that you bring a friend or family member with you. Within many communities, law enforcement is beginning to designate “safe exchange locations” for in-person buying and selling transactions that are monitored.

6) GAP and Extended Warranty
The Credit Union can provide Guaranteed Auto Protection (GAP) and extended warranties on private party purchases. Did you know that one in three vehicles has a mechanical failure in a given year? The Credit Union offers affordable Mechanical Breakdown Protection coverage through Route 66. Plans for autos and trucks start around $1,300. There are different plans and different levels of coverage. Unlike other providers, there are no deductibles. Warranties are available even if your loan isn't with the Credit Union.

Added Protections When Buying from a Dealership.

If you’re unsure about buying a car from a private seller, it may be best to work with a dealer instead. There are many benefits of working with dealerships as opposed to private sales, including:

  • Certified Pre-owned Vehicle. Most dealerships submit vehicles through a series of tests to make sure they operate and drive correctly. They will often certify the car will perform as expected once necessary repairs were completed.
  • Dealerships will often include a standard 30 day major component warranty on all pre-owned vehicles they sell to consumers. Private party sales typically do not offer any sort of 30 day guarantee as the vehicle is sold “as is”.
  • Purchase Windows. It’s becoming more common for dealerships to allow consumers to return a vehicle after a specific time frame (for example, seven days) if they are unhappy with the car.

We’re Here to Help!
Buying a car is a significant financial decision. When purchasing a vehicle from a private seller, there are quite a few pros and cons to consider. As your credit union, we want to partner with you to make sure you’re making sound financial choices that place you on a path to lasting success.
Visit the Credit Union or call 410-687-5240 today to learn more about how we can help you drive away happy in your new car.

Each individual’s financial situation is unique and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.