Buying a car from a private party has its benefits. You have the opportunity to get a better-maintained used car with lower mileage. Also, nerve-wracking coercion from salesmen and getting duped to signing unnecessary financing are done away with when dealing with a private owner. But much like buying at the dealership, you should prepare yourself for your purchase.

Do Your Homework

Cars sold by individual owners can be easily found. Look at newspaper classifieds, advertising websites, weekly shoppers, shopping circulars and community billboards. After zeroing-in on the car you want, some homework will save you a lot of time, money and heartbreak.

Look around to see if the asking price of the car is fair. Compare the private party selling price of the car you want based on model, make, year, options, accessories and mileage information. There are plenty of guides available that present the retail costs of car models, such as The Kelley Blue Book Suggested Retail Values.

Determine how much you can allot for a car. Check if you can pay full in cash, or if you will pay with financing. When using financing, total cost of the car is higher because payments also include Annual Percentage Rate (APR), loan costs, etc. spread over a longer period of time. The APR is usually higher and payment periods shorter on used cars than on new ones. If money is tight, consider paying cash for a cheaper car. If not, get a pre-approved loan before doing the actual shopping.

Ask Questions, Get your own Answers

When meeting with sellers, you should ask:
• How long have you owned the car? or
• Are you the original owner?
• What is the reason for selling?
• Are the repair records available?
• What kind of trips has the car been for?
• Is the title named after the seller?
• Does it have a salvaged title?
• Is the car still under warranty?

Have a mechanic check the car. It will be more helpful if the mechanic is someone you trust, well-established and communicates well about realistic repair options and costs.

Also, get a Vehicle History Report. There are numerous websites who offer this service online, among them www.carfax.com. The Report will show if the car you want to buy has ever been reported stolen or has been in accidents, if the odometer has been tampered with, the car's previous owners, and other important information about its condition a seller may not disclose.

When you're ready to buy, negotiate for a fair deal based on your researched information and inspection. Work around the budget you set for yourself. In negotiating to buy a car, patience is also a virtue. It takes time to arrive at a price agreeable to you and the seller. However, be firm about your price limitations. Be prepared to leave if the seller won't yield to your workable budget.

Get it in Writing

When both parties have agreed to a price, create a contract designating the agreed price. You'll also need to complete and submit the necessary Department of Motor Vehicles (DMV) documents to legitimize the sale. Documents commonly required are the bill of sale, release of liability, transfer of ownership, smog certifications, and titles. DMV requirements vary per city, county and state so ensure you have the correct checklist to avoid confusion and wasting time.

References

Federal Trade Commission. Buying a Used Car.

Kelley Blue Book. 10 Steps to Buying a Used Car.

National Automobile Dealers Association. Buying from a Private Party.

Orange County Teachers Federal Credit Union. Buying a Car from a Private Party.