When you buy a used car from a private seller, there's a lot less paperwork involved than if you're financing one at a dealership. The required paperwork when you buy or sell a vehicle yourself varies by state, but there's one universal fact: a clean and damage-free title is a must.
Required Paperwork for a Cash Purchase
If you're buying a car for cash, you need two pieces of paperwork: the vehicle title and a bill of sale. The title needs to be signed over by the owner-seller to you. In most states, you can do this on your own at the time of sale. Some states require a title to be notarized, so be sure you know the law for where you live.
Titles should be original and free of liens. You should be able to verify the vehicle identification number (VIN), whether or not the title is branded as anything other than clean, and the document needs to be well-cared for. If a title itself is stained, torn, or otherwise compromised, you may have trouble registering the car you purchase – some states don't accept damaged titles.
Additionally, a bill of sale is always required in a private sale. This must list the buyer and seller, as well as the VIN for the vehicle, and the agreed-upon sales price. This is important because private sellers can't charge tax. However, sales tax – which is typically based on the sale price – must still be collected in most states. This is typically done when you visit your local DMV in order to register the car.
Because all states have their own rules and regulations governing vehicle sales, registration, and taxes, be sure you know what’s required in your state before buying or selling a car privately.
Financing a Private Sale Car
Not everyone is able to save up the cash to buy a vehicle outright, even an affordable choice like a private sale used car. If you need to finance a private sale, you have to get a direct loan. You get a direct loan from a bank, credit union, or another direct lender, and you typically need good credit to qualify.
If you don't have good credit, it's more likely you may qualify at a credit union, as long as you're a member in good standing. If you meet the requirements and sign all of the loan documents, you get a check for the amount financed from the direct lender.
Tips for Buying a Private Sale Vehicle
Whether you're paying cash or financing a vehicle from a private sale, you should follow these tips to ensure you're getting a good car with a safe transaction:
- Look up an estimated value of the vehicle you're looking at on valuation sites such as Kelley Blue Book or NADAguides.
- Meet the seller in a public place, and bring someone with you.
- Always check out the car during the day when there's better lighting to see the body and interior condition.
- Make sure you can verify that the seller is the owner of the vehicle.
- Test drive the car and check everything. Don't forget that private sale vehicles are sold "as is" and there's no recourse if it breaks down right away.
- Ask for service records for the car, and have it inspected by your own certified mechanic before completing the purchase.
Need Another Car Buying Option?
When you have poor credit, it might seem logical that a private sale is a way to go – these vehicles are typically more affordable and no one is going to be checking your credit if you're paying cash. But did you know that there's another option?
It's true. Just because you have bad credit, it doesn't mean you can't finance a new or used car through a dealership – you just need to know where to go. Here at Auto Credit Express, we've been helping credit-challenged consumers get connected to dealers that can help for over 20 years.
We work with a nationwide network of special finance dealerships that have subprime lending resources available to help people with bad credit, no credit, and even bankruptcy or repossession.
All you have to do to start the process is fill out our fast and free auto loan request form, and we'll get right to work matching you to a local dealer!