Buying a Used Car from a Private Seller

So, you’re ready for a new set of wheels? How exciting!

There’s something to be said for the experience of bringing home a shiny “new” car. If that’s what you’re after, buying from a dealer is probably your best option. But, purchasing a car from a private seller can be a great idea, too. It will likely be less expensive — but the rewards can extend beyond money saved on the purchase price.

If you’re wondering, “should I buy a car from a private seller?” you’ll want to review the owner’s service documents and get familiar with the title transfer process in your state. Perhaps most importantly, you’ll also want to thoroughly review the Carfax or VIN report prior to making a decision.

Before you get out your checkbook or apply for financing, there’s a lot to think about. Take a look at our tips to help you through the process of buying a car from a private seller — and good luck!

What to Know About Buying a Car From a Private Seller

A car from a private seller will probably come with some noticeable wear-and-tear. But what you really need to verify when buying a vehicle from a private seller is that they're the actual owner of the car, and that the car's worth buying.

Compare the information on the seller's driver's license with the details on all paperwork they'll provide you by running a VIN check. With one, you'll also get news on the history of the car, and a status on whether or not the car's owned outright by the seller or if there's a lien on the car by a financing company. 

Here are some things to consider when purchasing a car from a private seller:

The car’s past

A used car had a “life” before you, and it’s important to understand what the car has been through. It’s up to you to gather information and do your research — especially if you’re considering purchasing a used car from a private seller.

Start by asking the owner some general questions about usage and mileage. You may learn something key about the vehicle’s history that will help inform your decision on whether to buy or to continue shopping.

Inspect the VIN

If everything sounds good, it’s time to do some fact-checking. Ask the owner for the vehicle identification number (VIN) and compare that to the VIN posted on the driver's side dashboard plaque near the windshield.
Once you have verified the VIN, enter it in the free VINCheck database (Opens in a new tab) on the National Insurance Crime Bureau (NICB) website to make sure the car wasn’t stolen or reported as salvage.

You’ll also want to purchase a car history report to get a record of accident damage, recalls and any title problems. Here's more information on what to look for and how to interpret car history reports.

Learn about the car’s maintenance history

It’s also important to make sure that the car has had maintenance performed at regular intervals, and that any necessary repairs or recalls on the car have been completed. You'll also want to check that the car was brought in for oil changes — every 5,000 miles for most cars.

A used car that has not had timely maintenance could be a risk for problems later on, even if it passes its state emissions inspection. If you’re buying a used car from a private seller, be sure to ask the owner for copies of the maintenance records. The car history report should also have maintenance checkup dates and details.

A reputable dealer typically provides some information about the car’s past for you. For instance, the dealer will offer a list of all the services that were performed on your vehicle at any franchise in the U.S. Better still, some used car from a dealerships may also be certified pre-owned (CPO) authorized, which usually guarantees the car has had regular maintenance performed, and that it has never been in a serious accident or had a major repair. CPO-endorsed cars usually come with a limited warranty, too.

The manufacturer’s guarantee

A warranty can provide the peace of mind that your car will keep running for at least a certain amount of time. But you don’t necessarily have to buy your car from a dealer to be protected under one.

The warranties provided by the manufacturer when a car is new are transferable to the next owner, regardless of whether the car is sold by an individual private seller or a dealer. Depending on how new the car is that you are purchasing, you may still have some of the new car warranty remaining.

If a warranty is important to you, purchasing a CPO vehicle may be the way to go. CPO cars always come with an additional warranty, although the specifics vary between automakers. The warranty is the primary reason CPO cars cost more than non-CPO cars, that extra peace of mind may be worth the additional cost.

What to Do Before Buying a Car from a Private Seller

As much as this car may be the make and model you’ve been looking for — be certain that the details check out before signing on the dotted line. If the seller’s claiming that tires were purchased last year, inspect the receipt and then compare the make and model of the tires to those on the car.

When it comes to what to do when buying a car from a private seller, it’s important to stick to the facts to be sure you’re making the right move. Here are other key points to take into account before buying a privately sold vehicle.

Gather the appropriate paperwork

Verify that both you and the seller have the right paperwork on hand for buying a used car from a private seller — if you want to avoid extra trips back and forth. Be sure you've got hard copies of the following documents handy before making the purchase:

• Your driver’s license
• A blank bill of sale that conforms with your state’s DMV requirements
• The seller’s emissions documents
• Proof of your auto insurance — a digital copy will work too

A few notes about the title

If the seller owes money on the car, you’ll need to coordinate the purchase with their bank in order to secure the title. If you unwittingly buy with an active financing lien on the car, the bank may be forced take the car from you if you avoid this step, should the seller not pay off their loan.

Visually verify that the title is in the current seller’s name and compare the name on the title with the seller’s driver’s license. If the car’s been paid off, verify no financing company is listed on the title as the lien holder of the car. If the owner’s still making payments, call the bank financing the loan to discuss next steps.

Look carefully at the title status and compare this against the title status in vehicle history report you’ve ordered. They should match.

Take it for a test drive

Getting behind the wheel is where the fun starts, but again — exercise caution here. Be sure to get written permission to drive their vehicle, first and foremost. Next up, put the car through its paces. Explore acceleration, braking and handling, etc.

After testing it works properly, turn the stereo off so you can listen for engine issues or other signs of trouble. Test the heat, AC and defrosting systems. Look under the car before you head out for signs of leaking and be sure to follow up on any concerns with your mechanic.

Have it inspected by a mechanic

One of the most important minor investments you can make when purchasing a car from a private seller is to have it inspected by a mechanic. Before heading out on your test drive, make an appointment with a trusted mechanic and have them run engine diagnostics on the car. This quick test can inventory the car’s internal systems and alert you to many types of issues.

The mechanic should also perform a multi-point inspection, similar to one that a used car dealer would perform on a new arrival. They’ll get you a report and don't forget to ask for an expert opinion on whether the car’s worth the price.

Get a title transfer when ready to purchase

If you’ve only purchased a car from a dealer in the past, the transfer of the car’s title is something that happens in the background. But after buying a used car from a private seller, you’ll be responsible for this job. After completing, signing and dating both copies of the bill of sale you've brought with, it's time to manage the title. 

Transferring a car title usually occurs in two steps. The first step is performed by the seller, and the second one is on you, the buyer. The seller’s job is to sign over the title to you, but they may need to turn the title over to the DMV first, depending on state laws where you're buying the car.

There’s usually a release of ownership area on the title where the seller will print and sign their name. Because each state has its own rules, be sure you’re checking in with the DMV on the exact process to ensure you’re getting it right.

Protect Your Car with American Family Insurance

Whichever option you choose, your American Family agent (Opens in a new tab) will be there to support you and help you find the right insurance to protect your new or used vehicle. Learn more about our car insurance options and how to select the best coverage for your used car.