How to pay for a car out of state from a private seller
Private party sales are already riskier than buying from your local car dealer, but what if the perfect car is out of state or across the country? In this article, we describe how to securely pay a private seller when you're shipping a vehicle or it's a long drive away from home.
This is the number one rule. Don't wire your seller payment for the vehicle or mail a cashier's check without taking possession of the vehicle and title at the same time. You might trust your seller and they might seem like a perfectly normal, reasonable human being, but remember that scams are designed to seem completely normal. You can reduce this risk by meeting your seller in-person or avoid it entirely by using an escrow-like service for payment and title transfer.
If you meet your seller in-person, you can bring cash or a cashier's check with you and inspect the vehicle and title yourself. That being said, we don't recommend carrying large amounts of cash since it can be lost or stolen. Your seller may not want to accept a cashier's check either. If you want to pay with cash or a cashier's check, your best bet is if you have a bank branch near where your seller lives. You can meet there, withdraw funds, and immediately give it to your seller in exchange for the keys and vehicle's title. Make sure the title is properly signed by all legal owners and get a bill of sale to document the transaction in case you run into any issues registering the vehicle later.
If you don't have a local bank to meet at, are looking for a more convenient option, or are planning to ship the vehicle, consider using an escrow service.
An escrow service is a middleman between you and your seller. Instead of paying your seller directly, you pay the escrow service and they pay your seller when you pick up the vehicle. Some also provide title transfer services where they receive the title from the seller and verify it was signed properly. These services give you and your seller peace of mind by verifying your payment and the vehicle's title.
KeySavvy is similar to an escrow service in that you pay KeySavvy and we pay your seller when you pick up the vehicle. As a licensed dealer, KeySavvy can also verify your seller's legal ownership of the vehicle, generate a bill of sale, and issue a temporary permit so you can drive your car right away. Learn more about using KeySavvy here. That's the end of our shameless plug.
You'll pay registration fees and sales tax when you register your vehicle at the DMV in your home state. If your seller had their title (i.e. they didn't have a lien), then you should receive the title when you pick up the vehicle. If the car is being shipped, some vehicle transporters will also collect the title. If you're using KeySavvy, your seller will mail their title to us and we'll check it for errors and work with your seller to correct them before forwarding it to you. In every case, when you receive the title, it must be signed by all legal owners of the vehicle. You won't be able to register the vehicle and receive a new title in your name until you receive a properly signed title.
If your seller has a lien, the lienholder must be paid before they'll release the title. Read about how to safely buy a car with a lien.
Unless the vehicle is currently registered in California, Minnesota, or Hawaii, your seller should remove their license plates before handing you the keys. To drive the vehicle legally, you'll need what's called a "temporary operating permit". In some states, you can obtain one from your local DMV as long as you can provide documentation of your purchase. The specific documents required, DMV fee, and duration of the permit vary by state and not every state offers one.
If you pay with KeySavvy, in most cases, we can issue a temporary permit that allows you to legally drive the vehicle right away.
There are secure ways to pay an out of state private seller. Just be patient, empathetic to your seller's point of view and avoid putting yourself in a vulnerable position by paying your seller in advance with a wire transfer or cashier's check.
About Andrew Crowell
Andrew is an avid car enthusiast, software engineer, and business leader in the automotive and e-commerce industry. He's owned a couple Mazda Miatas, an E46 M3, a Subaru WRX STI, and a Porsche 911 Turbo.