One way to save on your next car is to buy at private sale rather than through a dealership. You also usually get a car that’s been carefully looked after, as the owner will get a better price at private sale than from a dealer trade-in.
However, there are some risks of buying privately. Here we’ll take a look at what those risks are, and what you can do to minimise them.
Understanding the risks of buying privately
When you buy a car through a private sale purchase, you should be more careful about checking the vehicle before you sign the transfer papers and pay the agreed price.
- Is the car mechanically sound?
When buying a car through a private sale purchase, it’s essential to take a careful test drive.
Ask for service records, and get the car inspected by a third party mechanic to ensure that wear and tear is consistent with the seller’s information about use of the vehicle.
Once you sign the transfer of registration and pay the agreed price, that’s the end of your interaction with the seller. This means that it’s even more important that you check the car for damage or problems before the purchase.
In some states, you’ll need to get a smog test. If the car is less than 5 years old, ask for the warranty information and contact the dealer to ensure that the warranty is still in effect.
You are taking full responsibility for the quality of the vehicle purchased and the price agreed on, and you should walk away if the vendor is trying to rush you.
- Car written off and repaired
When you buy a car through a private sale purchase, you have to perform checks yourself to ensure that the car isn’t under finance, hasn’t been written off, and isn’t stolen.
It’s easy to mitigate the risks of buying privately with a quick CarFax search which will reveal if the car has been in a major accident, written off, had major repairs or been subject to a recall.
Check for obvious rust damage and make sure you start the car cold to ensure it’s running smoothly. You have to be even more careful with cars listed on eBay or Craigslist. Where possible always inspect the car yourself and meet the seller, or have someone you trust meet the seller and check over the car.
- Settling finance requires the buyer’s cooperation
You can definitely get finance to purchase a used car, whether you choose a personal loan or a secured car loan.
If you use a secured car loan to purchase a private sale car, the funds for the purchase are paid directly to the seller’s bank account. You’ll need the seller to provide their bank account number to receive the payment.
Using a personal loan, the funds are paid to your account. The catch is that an unsecured loan might attract a higher interest rate.
- Dealing with strangers
It’s rare that you’ll know the person you buy the car from. This usually means that you’ll have to travel to their home to view the car, and the owner will usually accompany you on a test drive.
Before you commit to a place and time to view the car, it can be helpful to talk to the person over the phone. This allows you to ask any questions you have that aren’t covered in the online advertisement, and also to make an assessment of the person selling the car.
If you can take someone with mechanical knowledge along when you view the car, you’ll cover off both safety and the mechanical soundness of the vehicle.
- Transfer of ownership
When you purchase at private sale, the seller should provide you with the transfer of ownership documents. Check their drivers licence to ensure that the details match that on the documents.
Ask for the owners manual, wheel change kit and any other tools that came with the car before you leave.