Choosing to buy a car from a private seller can be a good option if you have your eye on a particular model or you are looking to save some money. Let’s take a look at the benefits and risks of buying a car from a private seller and how to go about finding, negotiating, and financing a private car sale.
Some of the advantages of finding your next car online or in your neighborhood include:
That said, there are also things to be wary of if you are considering buying a car in a private sale. These include:
Some steps go into buying a car from a private seller. If you opt to go this route, make sure you are familiar with them!
It is up to you to negotiate the price in a private sale so make sure you know how much you can afford to spend. On top of your estimated monthly payment include registration and insurance costs, plus the costs of fuel and maintenance. Ideally, your total monthly care expenses should not be more than 15% of your total income.
Talk to several lenders about financing for a private car sale. You must know how much you can borrow as you will not have a dealer to help you with financing. Most lenders also require extra information, such as whether the seller owns the car outright or is still paying it down. This will affect whether your lender pays the seller or the car loan’s holder.
Search for a car in your price range using online search engines like autotrader.com or cargurus.com. Contact likely sellers by phone and ask:
Consider sellers’ answers carefully, both to identify cars you are interested in and to gauge the honesty of the sellers themselves.
Once you have identified what looks like a good buy, it’s time to do your homework:
Make an offer on the car and wait for a counter-offer. This might take several rounds but it’s essential you know the list value of the car from sources like Kelley Blue Book or NADA. If the price you pay is too high you might end up owing more on your car loan than the car is worth. Make your acceptance contingent on the car passing inspection by a mechanic.
Contact your lender with a signed sale agreement. After agreeing to the sale, the lender will either provide you with a check or will pay directly into the seller’s bank account. If the seller still has a loan, your lender will need to pay the lien holder directly, and it may take several days to release the car title to you. In this case, consider using an escrow service.
You will need both a signed bill of sale and the vehicle’s title to register your car in your name. You will also need the vehicle’s make, model and year, VIN, and odometer reading to arrange insurance for your vehicle. You will need to have insurance before you start to drive the vehicle.
Partner with Radiant Credit Union to finance your private party vehicle sale. We’ll work with you to arrange financing that meets your needs and fits your budget. We’ll also help you with the paperwork.
We offer our members:
We also offer related services like Gap Insurance, Payment Protection, Mechanical Breakdown Protection, and Skip-a-Pay.
Click below to learn how Radiant can help you secure a great rate for your used car loan.
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