A mom opening the car door for her young son.

7 Tips for Buying a Vehicle from a Private Seller

Whether you find car shopping a thrilling or horrifying experience, you are probably looking for the best deal that you can find. Buying from a private seller potentially allows you to get a used vehicle at a lower price but doing so comes with some additional risk and work. Here are a few tips to ensure your car buying experience has a happy ending.

1. Obtain loan pre-qualification. If you require financing for your vehicle purchase, obtain a pre-qualification letter before shopping. This will ensure your budget is realistic, will show the seller you are a serious buyer, and speed up the loan approval process when you are ready to buy.

The pre-qualification process is easy. Friendship State Bank lenders simply require a completed personal loan application (available online or in branch) and a copy of your most recent pay stub.

2. Verify the vehicle’s fair market value. Find the fair market value on Kelly Blue Book and/or Edmunds websites. You can also ask your lender to look up the NADA value that will be used during the final loan approval.

3. Ask the seller questions. Asking questions will help to better understand the vehicle’s history as well as additional steps that may be required in the buying process. 

  • Are you the original owner?
  • Has the vehicle ever been in a collision or required major repair?
  • Why are you selling?
  • Do you still owe money on the vehicle?
  • What is the car’s title status? Is it clean or branded? If a car has been significantly compromised in any way, it will be assigned a “branded title.” A branded title may be an indication that the vehicle was salvaged, flood-damaged, stolen and recovered, or used as a police car or taxi. This title status could limit your options for financing and insuring depending on the situation.
  • Whose name is on the title? The person’s whose name is listed on the title is the only one who can legally sell the vehicle.
  • Do you have a vehicle history report?

4. Review the vehicle history report. If the seller didn’t provide a history report, obtain the vehicle’s VIN or license plate number and request a report online from a company like Carfax or AutoCheck. It will be worth the $25 to $40 cost. These reports usually show salvaged titles, vehicle accidents, number of owners, vehicle use, service records, and recall information. It is not a fail-safe but can alert you to red flags.

5. Test drive and inspect the vehicle. If you are confident this could be the vehicle for you, coordinate a test drive with the seller. Test all the vehicle features. Give the interior and exterior a thorough examination. Have it inspected by a professional mechanic or by a mechanically savvy family member or friend.

6. Talk to your insurance agent. Take a few minutes to discuss this possible purchase with your insurance agent. Your agent can ensure you can obtain the proper coverage and an estimate of the rate to make sure it fits your budget.

7. Complete a bill of sale (purchase agreement) and obtain a copy of the vehicle title. After you negotiate and finalize a price, complete and sign a bill of sale and get a copy of the vehicle title. These documents are required to obtain your loan and transfer the title. The Bill of Sale Form 44237 is available on the Indiana Bureau of Motor Vehicles website. If the seller still owes money, they must provide a payoff letter from their financing institution that you can give to your lender.

Once you provide your loan officer with a copy of the title or payoff letter and bill of sale, they can finalize your loan approval. You’ll be cruisin’ to the local drive-in theatre in no time. The question is, which flick will you pick – the romance or the horror?