Buying a used car can be much more tricky than buying a new car. There are several ways to buy a used car, private party, auction or from a dealer. Which method is best depends on what is most important to you. If you are interested in hassle free buying, then buying a used car from a private party is probably the best way.

When you are buying from a private party there are some distinct advantages and disadvantages. The advantages include dealing directly with the owner of the car. There is no middle man, no run around, it is nice and easy. You can often get a better deal on a used car from a private party. Another advantage is that some states do not require sales tax on a private car sale; this alone could save $1,000s.

However, there are some disadvantages as well. First of all, if the person you are buying the used car from has financed or leased the vehicle then they do not have the title, which means you cannot drive off with the car clean and clear. It can take up to 10 business days to get a title from a lender. So basically, you hand over your hard earned money to someone you don’t know, accept some sort of agreement (make sure it is in writing, ideally a Bill of Sale) and wait for the title. Where this gets complicated is what happens to the car in the meantime? You paid for it, but it legally belongs to the seller. So do you take the car? Not likely, the seller is still responsible for the car. Do they keep the car? You already paid for it. What if they put miles on it, or scratch it, or wreck it? Then what? See the problem?

Another potential pitfall when buying a used car from a private party is that unless that car is still under factory warranty, what are you really getting? If the transmission goes out the next day, week or month, then how good of a deal did you get? You are unprotected. A prepurchase inspection is always recommended, but it can’t protect you from what might break, just what is broken or showing significant wear. A resource for you is a used car history report from a service like AutoCheck, or Carfax. These services compile information on vehicles. While not always accurate they can help you identify problems such as if the car has a salvage title, how many owners it has had and where it came from. This last one is important because there are a lot of hurricane damaged cars around being passed off in far off states as quality used cars. The history reports will only show accidents if there was a police report filed and/or the auto body shop reports the damage.

Buying a used car from a private party using financing can be a challenge as well. There are fewer lenders that will finance a private party used car purchase because there is greater risk to the bank due to the aforementioned factors. The ones that will often charge a higher interest rate to do the deal.

Read the next section of this post if you are interested in finding out how to buy a used car from an auction.

This entry was posted on Sunday, September 14th, 2008 at 10:00 pm and is filed under Car Buying Tips, Used Car Buying. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.