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Guide to Buying a Car from a Private Seller

Buying A Car From A Private Seller

In the past few decades, car buying options have evolved dramatically with the introduction of online car-selling platforms. A major component of online car purchases involves using person-to-person platforms, like Facebook Marketplace, that allow individuals to list their vehicles or browse local listings of privately-owned vehicles.

While only 13.5% of vehicles are purchased privately, with high used car prices and the increased ease of exploring local options online, individuals seeking an affordable, local vehicle often turn to private sales. Unfortunately, purchasing a vehicle from a private party can bring added complexity, from finding the right vehicle and ensuring its quality to securing financing and completing the transaction—including paperwork and taxes—without the assistance of a dealer.

However, with hundreds to thousands of dollars of potential savings on the line, the added legwork is something that many individuals are willing to take out. Curious about the process? In this post we’ll cover important things you need to know if you’re considering this route for your next vehicle purchase, including how to buy a car from a private seller, how to get a car loan for a private party sale, and how to avoid online marketplace scams, paving the way for a smooth and stress-free experience.

Where to Buy a Car from a Private Seller

Online platforms such as Craigslist, Facebook Marketplace, Autotrader, and eBay Motors are some of the most popular places to find listings of private vehicles. Additionally, you may wish to explore these options:

  • Local newspaper classified ads
  • Word of mouth: family, friends, neighbors, and colleagues
  • For sale signs in driveways or along the roadside
  • Car shows and meets

Why do people buy cars from private sellers?

Buying cars from a dealer can make the process simpler, especially if the dealer can handle much of the paperwork for you or provide in-house financing. But that convenience often comes with a big trade-off: price.

The sticker price of the vehicle will likely be higher at a dealer than for a private sale.  When you buy directly from the vehicle’s owner, you’ll be able to avoid many dealer fees and upcharges which can add up significantly.

Beyond saving money, you may have a wider variety of options to choose from when you buy from a private party. Local dealers may choose to forgo sales of older vehicles altogether, sending trade-ins to wholesalers instead. Specialty vehicles, including classic cars or cars with distinctive modifications, can be easier to find with private sellers than at dealers, as well.

The Downside of Buying a Car from a Private Seller

While there are some wonderful benefits to buying cars privately, it’s also important to note that there are a few drawbacks, too.

  • Transparency: Private sellers are under no obligation to provide you with the same information a dealer would such as condition of the car or maintenance needs.
  • Guarantee: Vehicles from private owners offer no warranty or legal recourse if the car breaks down shortly after the sale
  • Paperwork: You will be responsible for transferring the title, registering the vehicle, and paying any fees and transfer taxes.
Fortunately, you can avoid many of these pitfalls through simple due diligence. In the next section, we’ll discuss the process of buying a vehicle privately, including cautionary steps to take to ensure you get a quality vehicle.
A personal loan can be used to purchase a vehicle from a private party.

How does the process of buying a car from a private seller work?

There are many resources available to help you navigate purchasing a used vehicle. Whether you’re looking for a car on Facebook Marketplace or Craigslist or buying a car from a trusted friend or relative, here is a checklist of things you should do when purchasing a car.

  1. Set a budget. After taking a thorough look at your expenses and considering what an affordable monthly payment may be, set a realistic budget for your purchase.
  2. Get a preapproval for your loan. Working with your bank, get a preapproval for a loan for your vehicle early on. This will allow you to act quickly once you find the vehicle of your choice.
  3. Reach out to the seller to ask any preliminary questions regarding the car’s condition, why it is being sold, the asking price, the VIN, and any repairs that are needed.
  4. Do your own research. This may include running a Carfax Report, researching the VIN, and learning more about that particular make and model, including common issues and repairs based on age and mileage, and an estimated value of the vehicle based on its condition.
  5. Examine the vehicle and take it for a test drive. If you can, bring someone you know who is experienced with purchasing used cars and who knows what to look for. Strongly consider requesting the professional services of a mechanic to inspect the vehicle if you determine you are serious.
  6. Make an offer only when you feel confident. When you are comfortable and pleased with everything make an offer for the and purchase the car. Keep in mind that you may be able to negotiate the price based on its condition.
  7. Apply for your loan. If you are using financing to pay for your purchase, this would be the time to formally put in an application. When you get your preapproval in advance, the application is a quick and easy process. Note, you may apply for your loan prior to making an offer if you are using a personal loan instead of a designated auto loan.
  8. Update or acquire insurance. Once the car is in your hands, you are required to have insurance. Make arrangements before you formally transfer the title if you do not currently have a policy. If you currently have a policy, reach out to your company to find out how long you have after purchase to get the new car insured.
  9. Transfer the title, pay sales tax, and complete registration paperwork. Once you receive your loan, it’s time to settle up. Titles should ideally be transferred the same day as your purchase and at the same time that you hand over your payment. However, in Missouri you have 30 days to pay sales tax, transfer titles, get plates, and complete registration paperwork. In Arkansas, you’ll have 60 days.
  10. Be on the lookout for your registration. Documents registering the vehicle to you (the new owner) will arrive in the mail after your purchase.

Following this general process can help ensure a smooth transaction and quality purchase.

How to Finance a Car Bought from a Private Seller

Financing a car from a dealer is simple, if not always cost-effective. And when you purchase a vehicle from a dealer, it can also be quite easy to utilize a bank loan, as your salesperson and bank can coordinate to facilitate the transaction process.

When you buy a private sale vehicle, it may be possible to attain specific used-vehicle financing for private vehicle sales. However, note that it is rare for banks to offer vehicle loans for private party car purchases. Additionally, if you are able to find this loan, know that interest rates for these kinds of loans will likely be higher than loans for new cars or used cars purchased at dealerships, as there are many unknown variables associated with private vehicle sales.

Another choice is to use a personal loan to purchase a used vehicle from a private party. Personal loans can be unsecured or secured by an asset, such as a savings account. When using them to purchase a vehicle, you won’t be using your vehicle as collateral, so your bank does not need to know the specific condition or details of the vehicle that you will be using the loan for. Instead, they will base their decision on your ability to repay the loan, including your credit and income history. Because your loan isn’t tied to an individual vehicle, you can apply for the loan ahead of time to simplify the vehicle sale process.

If you can secure your personal loan with an asset like a CD or savings account, you may be able to unlock a lower interest rate. Unsecured personal loans will usually have higher interest rates, so it’s best to reserve personal loans for smaller purchases, like purchasing a less-expensive used vehicle, rather than larger loans, like the kind you may need to buy a brand-new car.

Be cautious and watch out for scams.

Watch Out for Scammers

As with many other person-to-person (P2P) sales, fraud is on the rise. Here are some things to keep in mind when purchasing a car from an online private seller to avoid falling victim to a scam.

  • Exercise caution when dealing with sellers who pressure you to rush the transaction or those who provide vague or inconsistent information about the vehicle's history, condition, or ownership.
  • Be wary of deals that seem too good to be true, as scammers often use enticing offers to lure buyers into fraudulent schemes.
  • Always conduct thorough research on the vehicle's background, utilizing tools like vehicle history reports and ensuring the seller's details align with the information provided in official documents. Ask for the VIN number to verify the car matches the pictures and descriptions on the listing.
  • Insist on meeting the seller in a public and well-lit location.
  • Never agree to wire money or make advance payments. Private party sales should not require a deposit.
  • Watch out for red flags such as requests for payment through unconventional methods or deals conducted in locations that seem suspicious. Note that payment scams for apps like Zelle and PayPal are common, and it may be difficult to recover your funds in some cases.
  • Don’t give the seller personal or financial information until the vehicle checks out and, when using Facebook Marketplace, keep the communication limited to Facebook messenger. Do not give sellers your phone number without meeting them in person.
Not sure if you are being scammed? Don’t hesitate to reach out for help to a trusted friend, family member, or financial professional for more insights and guidance. And be sure to report all potential scams to the online platform, as well as your local law enforcement in Cassville, Eureka Springs, Berryville, Harrison, Huntsville, or Holiday Island.

CS Bank Can Help You Buy Your Next Car

Buying a vehicle through a private sale can be a daunting process. While you may not be able to rely on the professional expertise of a dealer, there are many other resources that can assist, from your trusted mechanic to your experienced local lender. Whether you’re looking for a car loan to buy a car from a dealer or a personal loan to buy a car from a private seller, CS Bank can help you find the right financing to meet your needs.

Our online application process is easy and can be completed from the comfort of your own home. Looking for personal assistance? We’re also happy to be here for you in person—to answer your questions, guide you to the right financing products, and assist you through the loan process. Apply online or reach out to your local branch in Southwest Missouri or Northwest Arkansas to get started!