How to safely buy a car from a private seller

Beware of fraudulent ads for vehicles that don't exist or that the seller does not have in their possession. Photos are not proof the vehicle exists! Often the sale is presented as an “urgent transaction” to pressure the buyer to make a decision hastily. The seller's reasons for a quick sale may or may not be true. They may try to rush the sale because they claim to be moving, dealing with a military deployment, a divorce settlement, or a relative who has died. To influence your decision, they might share personal, but fictitious information. Seek documentation that verifies the seller's identity and confirms their story. Don't let your emotions and excitement of the potential purchase cloud your judgment.

You can also ask the seller for the VIN, if not already in their ad. Pull a NMVTIS title history report, CARFAX, or AutoCheck using the VIN to verify some of the information provided by the seller, like the mileage. If the seller won't give you the VIN number, it's a red flag.

Buy locally whenever possible and beware of sellers who refuse to meet with you. Be sure to meet in a safe public place and consider bringing a friend along. In person, you can look over the car and review the necessary documentation provided by the seller to complete the transaction securely.

Verify the vehicle's VIN number matches what was provided in the ad. The VIN can be observed in several places on the car, such as on the door panel or on the lower left corner of the dashboard, visible from the outside. You should also consider getting a pre-purchase inspection to learn of any needed repairs.

Does the seller actually own the car? Verify their identity by comparing information on their driver's license, registration card, title (if they have it), and license plate. Be sure all the information is consistent. The driver's license address should match the registration, and the registration should match the plate on the vehicle. The seller should be able to show you the title, if they don't have a loan. Compare the name, address, and VIN on the title with the registration and driver's license. A “private seller” may not actually be who they appear to be. An unethical dealer may be posing as a private seller to avoid certain dealership regulations designed to offer protections to consumers. This illegal scheme is known as “curbstoning”. Thoroughly verifying the seller's identity and legal ownership of the vehicle will prevent you from being a victim of this practice. KeySavvy will verify the seller's ownership for you!

Be sure the title is clear and there are no existing loans or liens. As auto loans become increasingly longer, it's likely the vehicle will have an outstanding loan that the seller has not completely paid off. In some cases, these liens may not be listed on the title. The lender can repossess the car after the sale, so it's crucial that the seller has ownership when you buy the car. You will not receive the title (the lender holds it), and you can't register the vehicle without it. Without registration, you can't get insurance!

There are several extra steps to take if the seller doesn't have the title due to an outstanding loan. Read our article about the different ways to sell a car with a loan.

Another common scam is failing to disclose title brands, or even illegally "washing" brands off the title. Title brands are records of potentially hazardous use or damage, such as flood exposure or "salvage" status, that are part of the vehicle's permanent title history. Title brands are a warning sign that the vehicle may require higher-than-expected maintenance, and an honest seller will disclose any title brands in their vehicle ad. The price should be significantly lower to reflect the higher maintenance cost and reduced resale value.

Most used car marketplaces, such as eBay and Craigslist, do not verify the seller's identity. They also do not guarantee the condition of the vehicle or the legitimacy of the title. As online sales increase, so do scams that take advantage of consumers. The Internet Crime Complaint Center receives thousands of vehicle transaction scam reports each year. An escrow service, a neutral 3rd party, should be used to facilitate payment. Escrow services will hold the buyer's funds until the seller can pay off the loan. These services charge a fee and you may be asked to share the cost with the seller. If using any online payment service, check the URL of the website you're on, look for slight misspellings, or random letters and numbers. Scammers can create websites that look and feel like the real thing, but will use a slightly different URL. This is called “phishing”.

If paying by cash, meet in a safe public place like your bank, and have a trusted person with you. However, be aware that carrying large amounts of cash is dangerous in any setting and is not recommended. Asking for cash, or other anonymous forms of payment, are hard to trace and should raise a red flag for the buyer. You are not eligible for any kind of refund from your bank with this type of payment. Cash that is lost or stolen is gone, and the chance of recovering it is improbable at best. Never share your account credentials or share your mobile banking app with anyone. Scammers may use the provided information to steal your identity, and money could be stolen from your account. Don't pay a seller directly with gift cards, wire transfers, or reloadable prepaid cards. These methods of payment are irreversible and untraceable, and you will have no way to get your money back if you can't register your new vehicle.