How to Buy a Used Car from a Private Party

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On Monday we bought my wife a newer “used” car. She drove her previous car, which was a 1998 Honda Accord, for about 3 years and it was time to replace it. I know firsthand that buying a used car can be frustrating, so here are some tips to make the process better:

Don’t Buy a Used Car From a Dealer

Often when I find a car on Craigslist that I like, I get excited about it. Mainly because the buying process appears to be almost over. Then I scroll down to the bottom of the ad and realize that it is being sold by a dealer. My excitement is instantly replaced with disappointment.

Reasons why a Private Owner is the Way to Go:

1. Sales tax

A dealer is obligated to charge you sales tax, where a private party is not (at least this is true in Arizona). If you were to buy a $5000 car and add 9.3% sales tax, that is an extra $465. This definitely makes buying from a private party more appealing.

2. They are generally less expensive

While I was searching for a car for Kim, I saw a couple of cars sold by dealers that were about $1,000 more than the private party listings. Dealers are in it to make a profit, while private party sellers are often motivated to get rid of a vehicle because they bought a new car, they are moving to a different state, etc. This makes it easier to negotiate with a private party and potentially get a better deal.

3. You know what you are going to get

What I mean is, if you buy from a private party, you can ask them questions about the car and they can tell you. A dealer has no idea how the car was driven because oftentimes they buy it from an auction. A person that actually drove the car for years can generally tell you about every rattle, blemish, or detail about a car where a dealer would have no clue.

Ask the Right Questions

Here are a few questions that I use:

  • Has it ever been in an accident?
  • Is there currently anything mechanically wrong?
  • Do you have the maintenance records?
  • Why are you selling the vehicle?
  • Does it have any leaks?
  • Do you have the carfax report?

These questions should give you a good basis on making an educated buying decision so that you don’t get ripped off.

Do Your Research

I use MSN Autos to see if there is any known issues with the car. It is a great resource to find out if the year, make and model that you are looking at has transmission, engine, or other issues. If it does, then ask the potential seller if they have fixed those issues in the past. If they have, it might still be worth buying. If they haven’t then you will probably want to keep looking.

Have a Mechanic Check it Out

This is one that can be difficult but is worth doing. I took a car to my mechanic that I was interested in and he showed me at least $1,000 in repairs that would need to be done. The engine mounts were shot.  I could see the engine rocking back and forth when he put his foot on the gas. It also had multiple leaks amongst other issues. This helped me determine not to buy the car and to move on.

Know What it is Worth

Go to Kelly Blue Book to determine the value of the car. You can generally ignore the excellent price as they say only 3% of cars are in that condition. You really only want to buy a car that is in Good or Very Good condition, so you can use those numbers to make an educated offer.

Negotiate the Price

I know this seems obvious, but there are people out that don’t even ask. I looked around the car and mentioned everything that I saw wrong with the car. These were mainly cosmetic issues, but nonetheless, they reduce what the value of the car is. We were able to get $500 off the asking price by doing this.

Don’t Sell Your Old Car First

If you do sell your previous vehicle first, than you have to figure out how your going to get around. This can be stressful, burdensome, and can be an overall headache. I recommend saving up and paying cash for a used car while keeping your old car. This way you can take your time while you search for the right replacement and not be rushed into buying something.


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