For Sale By Owner: Risks of Buying a Car from a Private Seller

When you compare car insurance with CoverHound, you are shown affordable rates by competitive companies hoping to do business with you. Once paired with an agent, steps are taken to make sure you have the coverage you need and that it complies with state laws. If only shopping around for a new car was as easy!

If you’re in the market for a new car and want to make a fast transaction, buying from a private seller probably sounds like the right way to go, but you might want to pump the brakes. As with anything, there are benefits and costs when you choose to purchase a vehicle from a private seller, but unlike buying from a dealership, a business that has to follow state consumer laws, private sellers have more freedom. As such, you could end up buying a lemon.

If you’re planning on buying your next vehicle from a private seller, you should know the risks involved. Here are some things to look out for before signing the pink slip.

Meeting strangers at unfamiliar locations.

No matter what age you are, someone you don’t know is a stranger. Often, private sellers will arrange to meet with you at a location of their choice. Before agreeing to meet, make sure the location is in a highly trafficked area, so that if something should happen, there are people around to alert. Above all, never meet with the private seller by yourself, always buddy up and let your friends and family know where you’re going and at what time. Yes, you’re an adult who can take care of yourself, but things happen. If you need more convincing, read this cautionary tale.

Undisclosed issues with the vehicle.

According to J.D. Power, “used car dealers must abide by Federal Trade Commission rules as well as state regulations governing how they operate and sell vehicles.” Used car dealerships must also provide a money-back guarantee or short-term warranty. If the vehicle doesn’t run as advertised or it’s learned it has an accident history that was not disclosed, the dealership must refund you.

This is not the case with a private seller. Once you have purchased the vehicle and signed your name to the title, anything wrong with the vehicle is your problem. It is up to you to research the vehicle and learn its accident history prior to the purchase. If you don’t take this step, a private seller can take advantage and sell you a car on its last legs, unbeknownst to you.

Filing vehicle ownership paperwork yourself.

Raise your hand if you like filing paperwork. Your hand isn’t raised, is it? When you purchase a vehicle from a reputable dealership, the car dealer you did business with will take care of the paperwork. When you purchase a vehicle from a private seller, you are responsible for completing and filing the paperwork correctly. You will need to make sure the paperwork is correct and that you have all of the necessary documents. If the paperwork is mishandled, the private seller can return later and claim the vehicle is still rightfully theirs, putting you in an unfortunate predicament.

If you’re going to buy a new car, make sure all your ducks are in a row, that includes getting car insurance. To get matched with an affordable policy, visit CoverHound ASAP.