How to Sell a Car: 7 Necessary Steps to Follow

Selling a Car Quick Facts

• Peer-to-Peer selling can potentially generate the highest transaction price when selling your car.
• Selling your car to a dealer provides the quickest and easiest avenue to sell a car.
• The requirements for registering a car after a sale varies by state, but all require a lien-free title.

When it’s time to sell your car, you can do it in a variety of ways. To choose the best course for you, consider your comfort level with each route. Then weigh them against the time you have to invest in selling your car and, ultimately, how much money you want to make in the sale.

In short, you can spend as much or as little time as you want to sell your car. If you use that time wisely, often, the more time you invest, the greater the reward. However, the first decision is the most important: Do I sell my car myself or sell it to a dealer? Here, we equip you with the information you’ll need, whether you sell privately (peer-to-peer) or to a dealer. If you want to skip ahead, use the jump links below.

• Different Ways to Sell Your Car
• Where to Sell Your Car
• 7 Simple Steps to Selling Your Car
• The Best Way to Sell Your Car Peer-to-Peer

Different Ways to Sell Your Car

A better phrasing of this question is, “What is your time worth to you?” You see, there are two basic ways to sell a car by owner: peer-to-peer or direct-to-dealer. In other words, you can sell it to another private individual or sell it to a dealer or some other entity that will turn around and resell it. There are advantages to both.

Spoiler alert: The biggest advantage to selling a car peer-to-peer is the opportunity to score a higher transaction price. However, it also requires more effort and time. Consequently, you must decide whether the extra money is worth the added time and effort.

With the Instant Cash Offer (ICO) service, you can connect to dealerships using your vehicle identification number, or VIN, and a bit of other information. Then, you will receive an ICO that you can take to the dealer who made the offer. The dealer hands you a check after a quick evaluation to confirm the vehicle’s condition, and you walk away or use it as a down payment on another car.

We use ICO numbers in our comparison below because they represent cash from a dealer based on book values from our sister site, Kelley Blue Book. Most dealers base a cash offer on this source.

Here’s an example of the differences in a car’s value among the ICO, trading it in, and selling it to a private party (peer-to-peer). We used the car valuation tool based on two actual VINs. Both vehicles were rated as “Excellent Condition.” We should mention that the ICO is a fixed number you can choose to accept or not, while trade-in and private party numbers are negotiated. Consequently, we express the trade-in and private party values as a range.

2020 Honda CR-V EX-L

• Instant cash offer: $21,500
• Trade-in: $22,665-$24,508
• Private party: $24,608-$26,623

2016 Chevrolet Equinox LTZ

• Instant cash offer: $10,700
• Trade-in: $9,296-$11,563
• Private party: $11,658-14,621

Where to Sell Your Car

Let’s look at the two leading options for selling a car by owner.

Selling Your Car to a Dealer

Most new and used car dealerships will buy your car. Whether it’s a franchised new car dealer, a national used car network, or your local corner used car lot, they will buy your car. If this route appeals to you, the Instant Cash Offer option is a no-fuss way to go.

Pros of Selling to a Dealer

• It eliminates listing and advertising the car.
• No fielding of phone calls from potential buyers.
• You don’t need to provide interested shoppers with test drives.
• The dealer handles all the issues with transferring the title and so forth.

Cons of Selling to a Dealer

• Lower transaction price because the dealer needs to generate a resale profit.

Selling Cars in a Private Sale

Selling your car to another individual means extra involvement from you. If you are willing to invest that time and energy to sell the car to another private buyer, the reward will be more money in your pocket. Later in this story, we will detail a significantly less stressful path to a peer-to-peer sale.

Pros of a Private Car Sale

• You get to set the selling price.
• The potential for making more money from the sale than a dealer’s cash offer.

Cons of a Private Car Sale

• You assume the entire transaction’s burdens, many of which are itemized in our 7 Simple Steps list steps below.
• Another rather big con to a peer-to-peer transaction is working out the payment type and verifying it. The sale will often be to a stranger, which maximizes the need for security and payment verification.

7 Simple Steps to Selling Your Car

1. Get Your Paperwork in Order

Having your paperwork in order is one of the more critical things to do when selling your car privately. Assuming you own the car outright, you’ll need to have the title in hand to prove you own the vehicle. Moreover, you need the title to transfer ownership to the buyer. If you don’t own the car outright and carry a loan balance, you must involve the lender before money changes hands. Any outstanding loan balance must be satisfied before you can pass the title to the new owner.

TIP: We encourage you to contact your state’s motor vehicle agency or Department of Revenue because the paperwork you need varies by state. We have compiled a state-by-state list of motor vehicle agency links.

What Paperwork Do I Need to Sell My Car?

Here are some of the other documents your state or the buyer may require, in addition to the title:

• Bill of sale – A mashup of a contract and receipt, this document should include information, like the date of sale, VIN, odometer reading, and full names of the buyer and seller with signatures and addresses each. Furthermore, the vehicle’s make, model, and year must also be included.
• Vehicle history report – This can be obtained online through sites like AutoCheck and Carfax. It includes any reported accidents, past registered owners, maintenance, etc.
• Maintenance records – If you were thinking ahead, you’ve kept a record of your car’s scheduled maintenance visits. For example, regular oil changes, transmission fluid changes, and so forth will add to your car’s value.

2. Find the Value of Your Car

• Get accurate valuation: With your paperwork in order, it’s time to find your car’s book value. Use the Kelley Blue Book car valuation tool to determine what your vehicle is worth. Be as specific as possible with the details and condition of the car to receive the most accurate valuation possible.
• Provide honest car assessment: To get the correct valuation for your vehicle, you will need to know the car’s year, make, and model. Entering your ZIP code will also help determine the local price, as vehicle prices can vary by location. Be honest with yourself about your car’s condition and features to ensure you get the most accurate valuation.
• Check private party value: If you’re selling your car personally, make sure you look at the private party value of the vehicle. This estimate differs from the trade-in value, which is generally lower than what you get if you sell the car.
• Set the vehicle price: After receiving an accurate and honest valuation of your car, you can now feel confident when setting a price for your vehicle. Whether you are open to negotiating or have a firm price, have a target floor price under which you refuse to go. Remember, you now know the true value of your car and have the last say on its selling price. Unless you are so desperate and you’ll take almost any offer, exercise patience and wait for the right buyer.

3. Prepare Your Car for Selling

Whether selling your car yourself or going for a dealer cash offer, you should do some prep work to maximize the vehicle’s value. When the buyer (or a dealership used car evaluator) first sees your vehicle, the desired reaction is that you took care of it car and that it’s in good shape.

• Clean the car inside and out: Let’s be honest. Nobody wants to spend their money on a dirty car. So, if you want somebody to buy your car, detail it so well that it looks like it’s fresh off the showroom floor. Washing the exterior is a given, but it might be even more important to clean the interior thoroughly. Few things will turn off a buyer quicker than sliding into a car with a messy interior. You’ll have a hard time finding a buyer willing to meet your asking price if there are fast food bags, food crumbs, and other trash on the floor of your car. Remove any trash, vacuum the carpets and floor mats (including in the trunk), clean the inside of the windows, and if you really want to impress buyers, spray some air freshener. Moreover, you should wipe down every surface. If this seems intimidating, you can always spend a few bucks and have a professional detailer clean the car inside and out.
• Stage your car: After that thorough cleaning, your car is ready for its close-up. We can’t stress enough the importance of taking descriptive photos when selling a car. High-quality photos of the vehicle, and plenty of them, make your car look its best. Also, it helps potential buyers know exactly what they are getting. You don’t want them surprised when they arrive for a test drive. Quality photos from all angles are more critical now than ever because shoppers expect lots of photos. Consequently, when they don’t find them, their first thought is, what are you trying to hide? If you are having trouble coming up with picture ideas, think about the sort of photos you would need to see in a used car listing.
• Exterior photos: Photos snapped in a pretty or interesting setting are more appealing than those shot in an apartment complex parking lot. Whether you use horizontal landscape mode or vertical portrait mode, ensure you can see the entire vehicle or the specific section you want to highlight. Do a simple walk-around of the car with a clear photo of every angle, keeping the whole car in the frame. If there are any flaws in the exterior, such as dents or scratches, take close-ups because you want to eliminate surprises when someone comes to look at the car.
• Interior photos: Capture clear photos of all the seats, the cargo area, and the dashboard, showing the steering wheel and sound system. Also beneficial — try taking a “POV,” or point of view shot of what the driver sees when sitting in the driver’s seat. Snap a photo of the odometer confirming the mileage on the car. PRO TIP: When shooting photos of the instrument panel, have the ignition on to highlight the displays and touchscreen. As with the exterior, take close-up photos to avoid surprises if there are any notable flaws like a tear in a seat, a sagging headliner, or some broken plastic.
• Under the hood photos: Make more to take one or two photos under the hood. If possible, add a couple of pictures underneath the car, especially if it’s an older car where buyers will be wondering about rust. If the engine bay is dirty, clean it before shooting any photos.

4. Advertise Your Car

At this point, it’s time to list your car for sale. Here’s what to include in the advertisement when you post your car online.

How to Create an Effective Car Advertisement

Although photos are essential, they’re not all you need for an effective online car advertisement. You must also write a compelling description of the car. When writing, consider the facts that would motivate your interest.

• Describe the notable features of the vehicle. Cover the year, make, model, trim, and any unique features like all-wheel drive and any other features adding to your car’s appeal.
• Highlight key points like its low odometer mileage or if you are the original owner.
• Personalize the description. If it’s an SUV, explain how your family enjoyed a vacation to the mountains or the beach. Praise its roominess and comfort. If it’s a compact car, applaud how easy it is to park and its high fuel economy.

Autotrader makes creating an online listing easy. When you create your ad, we already have common selling points listed for you. Select the phrase that matches your car.

Check Other Boxes

Make sure you mention any modifications or any recent service. For example, it’s well worth mentioning that new set of tires you just mounted on the car. On the other hand, it’s just as important to point out any flaws, like if it makes any unusual noises or the air conditioning doesn’t work.

Remember, you dictate the final transaction price. When creating the listing, if you have specific payment terms, be sure to point that out. If you’re open to offers, make sure you note “OBO,” or best offer.

If the advertised price is firm — that is, you won’t negotiate the price — you should include that in the ad. If you insist on a cash deal, say “cash only” so you don’t get any buyers with weird ideas about payment plans. Buyers will want to know the car’s ownership status, so mention whether there is a lien (loan balance) on the car or if you have the title in hand.

5. Answer Your Texts or Emails

After placing your car for sale, you must interact with potential buyers. In other words, answer your email or texts. Responding promptly and politely is critical. Shoppers will always have questions requiring answers before considering your car further. Second, yours probably isn’t the only vehicle they are considering. If you are unresponsive, even the most interested shopper may move on to the next car on the list.

6. Schedule Test Drives

If you’ve answered a shopper’s questions satisfactorily, the next step is scheduling an inspection and test drive appointment. This is not only where the rubber meets the road but also when you are assuming a degree of risk.

Most potential buyers will want to see the vehicle in person, take a test drive, and maybe even take it to a mechanic. Who are these strangers with whom you will meet and hand your car keys to? You can’t avoid this interaction. However, you can take some precautions.

Stranger Danger

Unless you live in Mayberry, it’s likely you aren’t acquainted with the potential buyers who want to test drive your car. We suggest taking some precautions to ensure your safety, as well as your car’s safety.

• Telephone interview – A phone call with a potential buyer is an opportunity to provide information about your vehicle and answer the shopper’s questions. However, it’s also an opportunity for you to vet the caller while laying out the ground rules for the rest of the buying process. Before you take the first shopper’s call, you should already have decided the form(s) of payment you will accept: cash, escrow service, etc. This is the time to inform the caller of the required form of payment. Also, if you are scheduling a test drive, lay out any ground rules for that (see below).
• Inspection or test drive – Even in this day of doing business over the internet, most serious shoppers will want to lay their eyes and hands on your car. Here, you must weigh inconvenience against security. Never invite a total stranger to your home. To minimize the threat, we suggest arranging to meet the potential buyer at a third-party location, preferably a public parking lot with plenty of traffic or in front of a police station or city hall. Furthermore, we recommend inviting a friend or adult family member along. When arranging the meeting, inform the potential buyer you will need to see their driver’s license and snap a photo of it with your phone. Know the area around the scheduled meeting location and have a test-drive route in mind. Insist on riding along on the test drive.
• Other precautions – Any paperwork the potential buyer wants to review, such as maintenance records, should be copies or the originals in which you have blacked out any personal information. In other words, don’t share your address or other personal information that might lead to identity theft or some other fraud.

7. Finalize the Deal

The ideal outcome of a completed test drive is the shopper making a serious offer to buy the car. If your asking price exceeds the lowest (floor) price you are willing to accept, you will need to negotiate a final price based on your floor price and the offer.

What Is the Safest Payment Method When Selling a Car?

There are several possibilities for exchanging funds in a peer-to-peer car sale. Each poses some degree of risk for the buyer, seller, or both. Using an escrow service is often considered to be the safest. The buyer’s money is held in escrow until the vehicle transfer is complete. While the service is secure, it’s also pricey. A typical fee is 2% of the transaction. That’s $500 on the $25,000 selling price of a car.

How to Exchange Funds for a Used Car

Cash – Involving a high amount of risk because it’s an exchange of cash between strangers, cash is also the quickest form of payment.

Certified check – Accepting a certified check opens the door to fraud. Though this method is safer than cash, we recommend against accepting this form of payment.

Cashier’s check – Treated by most receiving banks as cash, a cashier’s check is issued by a bank against its funds. In other words, the issuing bank transfers the check amount from the buyer’s account into the bank’s account before issuing the cashier’s check. However, cashier’s checks can be fake. We recommend verifying a cashier’s check with the issuing bank beforehand and any stipulations to accessing the funds either with the issuing bank or your own. Imagine selling the car and being unable to access the funds immediately.

Escrow service – In this scenario, the buyer deposits the negotiated transaction amount into a third-party account, where it’s held until the vehicle exchange is complete. It provides a high degree of security to both buyer and seller. However, the fee can often be as much as 2% of the transaction price. PRO TIP: When you use Autotrader’s Private Seller Exchange and sell your car peer-to-peer, the marketplace service not only allows you to list the vehicle to find buyers but also collects the funds in a secure environment for the sale.

Bank transfer — Here, the buyer’s bank transfers an amount equal to the transaction price to the seller’s bank. It’s safer than exchanging cash and doesn’t have the room for fraud a cashier’s or certified check does. The two downsides are: First, the buyer must trust the seller to fulfill the vehicle exchange. Second, the exchange may take 24 hours or more to complete and involves a transfer fee.

Digital payment platforms — Anyone who has made online transactions is probably familiar with digital payment services like Zelle, PayPal, and Venmo. Operating in a fashion similar to bank transfers — only nearly instantaneous — such digital services provide a secure transfer of funds. Though the downsides are that both parties must have a verified account, there may be transfer limits, and you will need to figure out beforehand if your transaction falls within those limits.

Transferring a Car Title

Transferring a title is the responsibility of the buyer. As long as you have a free-and-clear title to the vehicle, you must fill in the owner’s and seller’s portions of the title and hand it off to the buyer. If your state requires a bill of sale, you’ll need to fill out the appropriate form, sign it, and have the buyer sign it. Keeping a signed copy for your records is a good idea.

A title transfer gets more involved if it has a lien. That is, if you still owe a balance on the car loan or if you used your car as collateral on some other financial commitment. In this case, the best course of action is to complete the transaction and the vehicle handoff in the offices of the lender. Otherwise, the buyer must trust you as the seller to pay off the outstanding loan balance, obtain the title, and then forward the title to the buyer. That’s a lot of trust.

The Best Way to Sell Your Car Peer-to-Peer

Nearly every negative aspect of a peer-to-peer car sale detailed above can be avoided with Autotrader’s Private Seller Exchange.

What Is the Private Seller Exchange?

Think of Private Seller Exchange as an unbiased broker, providing a robust and secure marketplace for peer-to-peer car deals. Consequently, it benefits both the seller and the buyer. The exchange is designed to allow car sales directly between a private seller and a private buyer without sacrificing convenience, quickness, or security. It creates a bridge of trust between seller and buyer through communication, investigation, and verification, aspects of which are all overseen and validated by Autotrader. This includes guaranteeing the integrity of the money exchange.

Private Seller Exchange (PSX) is a cafeteria platform on which buyers and sellers can pick the services they want from a list covering virtually every step of the car sale. Every aspect of the sale, except the test drive, can be completed on a smartphone. And PSX will even help set up the test drive. The cost to the seller? It’s $99 or 0.99% of the transaction price, whichever is greater.

Among the seller services, it provides access to thousands of car shoppers, price guidance, help writing the ad, bringing top dollar for the vehicle, secure payment service, scheduling the test drive (time, place, etc.), no-hassle title transfer, and more.

For buyers, the available services are a huge inventory of cars for sale, access to the seller, help with arranging test drives, payment facilitation, a lien-free title, no-fuss title transfer, access to gap insurance, private-party pricing, and more.

To get started, all a buyer needs to do is browse the used cars for sale by owner on the Private Seller Exchange and pick a car, truck, or SUV from the inventory.

Editor’s Note: This article has been updated since its initial publication.