Legalities of Buying a Used Car From a Private Seller Quick Facts
- What you see is what you get with an as-is used car acquired from a private seller.
- When buying a used car, always obtain a vehicle history report.
- Verifying and handling the paperwork is the buyer’s responsibility in a private seller transaction.
If buying a used car is best for your budget, you must decide whether to buy that car from a private seller or a dealer. There are advantages and disadvantages to both. Here, we will lay out some of the legal pitfalls of buying from a private seller. Furthermore, we will offer a suggestion or two for avoiding those pitfalls.
- Protections When Buying a Used Car
- Dealing With Strangers
- Paperwork for Buying a Used Car From a Private Seller
- What It Means to You
Protections When Buying a Used Car
The rights of a consumer buying a used car from a private seller are quite different than when buying from a dealer.
A dealer must comply with the Federal Trade Commission’s Used Car Rule. That means a dealer must display a Buyers Guide window sticker on every used car it offers for sale. In essence, the Buyers Guide discloses a list of information, including if the vehicle is being sold as is or with a warranty, and if so, what that warranty covers. The Buyers Guide also includes suggestions for the potential buyer, such as getting the car inspected prior to buying it, the things to look out for in terms of the vehicle’s mechanical components, and so forth. The rule holds the dealer responsible for misrepresenting the car’s condition or warranty.
Unless some portion of their new car warranties remains in effect, used cars offered by private sellers are on an as-is basis. In other words, with few exceptions, the buyer has little or no legal recourse if the used car turns out to be less than it seemed. Or, it’s not what the seller claimed it to be.
RELATED: Is the Factory Warranty Transferable When Buying or Selling a Used Car?
Therefore, if you buy a car from a private party, you are stuck if the seller doesn’t disclose that the vehicle was wrecked and repaired or if it turns out to be a lemon. The buyer may have some legal standing for intentional fraud, such as if the car was stolen and retitled or if the odometer was rolled back to reflect fewer miles. However, it would require taking legal action and proving the seller intentionally misrepresented the vehicle.
Precautions to Take When Buying From a Private Seller
When buying a car from a private seller, protecting yourself against potential scams is important. Use the vehicle identification number (VIN) to obtain a vehicle history report. You can purchase a vehicle history report from a company like AutoCheck. Sometimes, private sellers will purchase the inspection and history report for you. Moreover, you’d be wise to have the used vehicle thoroughly inspected by an ASE-certified mechanic of your choosing. Also, most sites offering vehicle listings or shopping services have fraud prevention tools and tips that can help you avoid mistakes.
PRO TIP: Autotrader’s Private Seller Exchange is one-stop shopping for private seller used cars, and it includes fraud protections, including when you exchange funds and the title.
Dealing With Strangers
Whether you choose to buy a used car from a private seller or a dealer, you’re likely to be meeting with people you don’t know. With a dealer, such meetings occur at a business establishment during regular business hours. With a private party, the meetings may take place after hours at a personal residence or some other unfamiliar location.
When purchasing a used car from a private seller, meeting in neutral, public locations is advisable to inspect and test-drive the vehicle. If the vehicle does meet your requirements and you negotiate the price, you may want to make a second trip to exchange the cash for the title. Use the buddy system and take an adult friend or relative with you for the test drive and when making the payment. Avoid meetings at remote locations and only meet during daylight hours. Also, do not send an electronic or digital payment if you don’t have in hand a clean title correctly completed by the seller.
PRO TIP: Exchanging funds is arguably the riskiest step in a private-seller transaction. Avoid a cash payment; instead, use a cashier’s check drawn on your bank. Because you’ve been wise enough to transact this exchange during business hours, the seller can call your bank and verify its legitimacy.
Paperwork for Buying a Used Car From a Private Seller
Another disadvantage of buying directly from a private seller is that all the paperwork regarding the transfer of ownership is your responsibility. Both buyer and seller must ensure all the dots are connected, from financing and sales tax to proper car registration. By contrast, when buying a used car from a dealership, the dealer handles all the paperwork and collects the fees and taxes. If you’re concerned about this, your local DMV (Department of Motor Vehicles) can supply you with all the forms and information you’ll need ahead of time.
What It Means to You
Everybody likes to save money, and you can save money by buying a car from a private seller. The savings come at a cost, however — primarily in terms of legal protection and handling of the paperwork. On the other hand, there are ways to ensure you are not getting a lemon. Moreover, there’s no way to quantify the peace of mind that comes with knowing the vehicle’s history. If you are willing to do the work by taking precautionary steps and saving money is your main objective, buying a car from a private seller is the way to go.
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Editor’s Note: This article has been updated for accuracy since it was originally published.
I am buying a car in payments from someone my son knows – owner holds the title but says that he will not give me the plates till it is totally paid off – I have heard of title but not plates. how the heck am I going to drive it?
The plates are in the owner’s name as well. You could put a temporary plate on the vehicle (check your state laws) but those are usually only good for 30 days. It might be best to contact the tag office in your area to determine what else you can do. It’s not a good idea to enter in such an arrangement. But hey, we get it. Times are tough and people need to get around.
I got one for u if u like drama. I bought a truck 1800 dad had parts for it and his labor he’s a mechanic ,truck done he passed away. So sold truck to gf was going to be 7000 I told her just pay my mom 3500 I don’t need the 3500. So mom gets 3500 ,gf drives truck 100 miles engine blew .I felt bad gave gf 3500 out my own pocket thinking Mom will give the 3500 back until we can truck going again . Nope says it’s hers cause Dad’s parts and labor. I’m like Dad would never sell a lemon to someone wasn’t his style . So I’m out the original 1800 plus the 3500 while mom has 3500 can do whatever with. Smh
we bought a car and the guy didnt have the title and said he would send it to us, we paid him in full and had a notary write up a note stating that he would have it to us in 5 business days. he overnighted it to us and low and behold it was a reconstruction title out of PA. his post on line stated clean title and CT registration. Is there anything that can be done? we have had the car a little over a month.
I have bought a Jeep Grand Cherokee for a thousand we paid 520 of it and agreed to pay the other half at a later time the person which is a private seller comes into my yard and comes and takes the car. I had the car for 4 days. Is there anything I can do about this? He is refusing to give me my money back.
We just bought a vehicle they stated had only electrical issues. Got it home to discover a cracked block. PLUS, now they “can’t find the title.” I returned the vehicle and they are refusing to give me my cash back. There has got to be a way to tackle this issue.
Did you have any pisitive outcome? The car i just bought has acracked block too.
I bought a 2009 Saturn Outlook drove it from San Diego to Escondido parked it and the next morning the vehicle will not Go in Drive it goes in reverse I asked the seller to give me $ 3600.00 I paid $ 4100.00 now he won’t answer his phone
We purchased a van for 3000 drove straight to dmv . Which is not even 2 miles and the transmission startwd slipping bad in it . The owner still has it and is refusing to give me my money back. We have a court date for may 15 . So whats going to happen ?
What ended up happening with your case? My friend is going through the same issue now.
I am also curious to know what happened here. I might have to do this soon.
What happened on your court date? Were you able to get your money back?? Same thing just happened to us. Bought the car and next day the transmission started acting up.
what was the outcome? I just went through something like this and called the seller within 20 minutes of deal, he refused to give me my money back
I just purchased a vehicle from a private seller. The seller told me it was a 6 cylinder vehicle. When I got it I took it to my brother he looked at it and told me it was a 4 cylinder. I imdeiately called the seller and told them. They agreed to buy it back minus the trans I agreed but had to wait for the title now that I got the title they said it’s mine tough is there anything I can do or am I stuck with a vehicle I do not want ?
My daughter is a single mom and just bought a car for $2000 dollars and the guy said he just fixed alot of things in it. However, she has put over $1200 into four days after buying it. What can she ask the previous owner to do . She doesn’t get support from the father of her child.
I have a question my brother purchased a vehicle from a private seller its a dodge 4×4 the man and him discussed in text about the truck the seller stated the truck was in perfect running condition. However about 15 minutes after my brother left the truck began leaking oil and transmission fuids my brother immediately called the guy and he stated that he had to go to work and was already on his way to san diego wouldnt be back until late so my brother took the truck back to the guy AND THE GUY TOLD HIM HE DIDNT HAVE All his money but gave him his word he would have it all in full the next day anyhow my question is my brother didnt sign any paper work at all yes guy wrote a letter stating it is as is but my bro did not sign it now guy has the truck in a shop and is telling my bro hes not giving him his money back is there anything my brother can do?
Bought full size pickup put less than 500 miles on it, the transmission went out. The previous owner will not take it black
That is unfortunate. I can tell you that the seller probably did not know the transmission was gong to go out on you. A transmission usually only starts slipping a few days before it completely breaks. I can’t say for sure, but the seller most likely did not have any idea the transmission was going to go out on you. Your best bet is to find a local garage that can locate a used transmission with lower mileage to install @$1200?…or get some quotes on a rebuilt transmission @$2,400 or so.
Sedan
Why not use the new Veryfier app to hire an independent third-party person to go out inspect and check the item before you purchase? It is really important that the inspection should be done by a 3rd party person who will give an honest review and report. Download the app at the Veryfier website or go to iTunes store.
I have bought 4 cars from private owners and only one of them was a bust – the one I bought from someone I knew! It’s the only one I did not have checked by a mechanic because I trusted his word. I should have known since he works in sales in the medical field. When I have a mechanic check it, I get more negotiating power. I always recommend doing the check before buying. You’ll probably recuperate the cost of it on the deal.
very helpful article…wish I would have read it sooner..just bought a lemon from a private owner. Paid 1500 in cash…took it to my mechanic…going to cost 2500 to 3000 just to pass inspection. Never again…
Umm you paid 1500.00. When you buy a 1500.00 car how can you expect it to be like a new car?
very helpful, thanks