Buying a car from a private seller

Before looking at potential vehicles and buying a car from a private seller, a few things can make the process easier such as nailing down your budget, making a list of must-have features, and knowing state requirements for used cars. Figure out how much money you can put down on the car now and how much you're willing and able to borrow. That should give you an idea of your budget for your purchase.

Regarding auto insurance, some states require you to have insurance for the car before buying. Other states allow you to purchase and register a vehicle before obtaining an insurance policy. You might make a list of documents you'll need before getting insurance. Learn more about the car insurance requirements in your state.

Once you've done your prep work, start looking at cars in your area with your list of "must-haves." When you find a car, use the vehicle identification number (VIN) to obtain a vehicle history report from a company like AutoCheck or CarFax. Make sure the vehicle history report matches what the owner tells you about the car. If the owner doesn't want to give you the VIN, walk away from the sale.

Compare the value of each vehicle on your list to its market value from third parties like Kelley Blue Book. Get estimated values both for the condition as the seller describes it and at least one condition below, e.g., if a seller's description indicates "excellent" condition, get the value for "excellent" and "very good" conditions. Learn more about what to look for when buying a used car.

When buying a car from a private seller, who may be a stranger, it's important to meet in a public, busy location. You should inspect and test drive the vehicle in a public location as well. You may want to use the "buddy system" and bring along an adult friend or relative for the test drive. If all goes well and you're ready to make a payment, meet in a public spot and bring a friend. Avoid meetings at remote locations and only meet during daylight hours.

Inspecting the car includes conducting a physical inspection and test drive and speaking with the current owner. Try to get information about the car's history — ask about any accidents the car has been in and the number of previous owners.

Ideally, test drive the car in a public place during daylight hours, on a day with good weather. Clear skies and bright sunlight will show imperfections and damage better than streetlamps or poor lighting. It's good to let someone know when and where you will be performing the test drive.

Before buying a used car from a private party, always have a trusted mechanic check that the vehicle is in good working order. The mechanic may help you estimate the cost of any needed repairs.

When you buy a car from a private party, your best bet may be to pay for the vehicle yourself. You may be able to get a car loan for a private party sale, but it can be complicated. Also, the terms for private sale auto loans are typically less favorable. Many people find negotiating stressful, but the following tips can help you get the best deal:

• Know the car's actual value: Print out the values you found for the car and bring them with you. Proof of the car's value can back up your offer if the current owner insists on an unrealistic price.
• Bring your mechanic's repair estimates: If the car needs critical repairs immediately or soon, try to get the seller to deduct the repair cost from the car's sale price.
• Find out about the seller's circumstances: When speaking with the seller, try to learn why they're getting rid of the car. For instance, they're under pressure to sell the vehicle quickly if they're moving away. In that case, they may be willing to accept a lower price.
• Ask about original equipment: Find out if the current owner has the original manual, spare keys, and any other equipment the car would have had when it was new. If anything is missing, it can justify reducing the price, even if the missing equipment isn't essential to you.

Follow these steps to complete the sale:

• Get everything in writing: Record the sale details, making two copies, including contact information for you and the seller, the price and mileage of the car, the date of the sale, and any other terms on which you've agreed.
• Collect the documents: You need your information and the seller's to complete the sale legally. First, ensure they have the car's title and registration with their name on it - otherwise, the vehicle isn't legally theirs, and they have no right to sell it. If they don't have these documents or are reluctant to show them, you may be dealing with a stolen vehicle. Learn how changing names on car registration works.
• Make the car payment: Pay the seller by check or money order. A check will give you a record of the payment; it's safer than carrying large sums of money. Ideally, you should make the payment when the car title is transferred to you.
• Meet at the DMV to transfer the car's ownership: Remember that you need to bring any documents your state requires - which may include proof of insurance for the vehicle. Make sure the seller brings any documents they need. Finally, give them the payment and complete the title transfer to enjoy your new ride.