How to safely sell a car privately
Selling your vehicle to a private party buyer will always get you the most for your car and there are many great marketplaces to advertise your car for sale. With good pictures, a fair price, and prompt communication, you'll have lots of interested buyers quickly. However, once you have a buyer who is ready to purchase, what's the best way to get paid as a private seller? Don't let all your time and energy go to waste by getting scammed and make sure you properly complete paperwork so that you are not liable after the sale. This article describes how to safely sell your car to a private buyer.
Is the buyer who they say they are? Verify the buyer's identity by comparing their driver's license to another form of identification (e.g., passport, credit card, utility bill, etc.). Compare the name, photo, and address. You can also use Google or social media sites to verify their name, but not everyone will have their information publicly available. If you don't find anything when searching for their name online, that doesn't necessarily mean they are fraudulent. Be suspicious if someone wants to buy your car without seeing or driving it. When you deal locally, you can easily compare them to the photo on their license.
Why is it important to verify their identity? You may think that as long as you receive money for your car then it doesn't matter if the buyer is posing as someone else or not. When selling an old charcoal grill, this is a pretty safe assumption, but vehicles are highly regulated. The next section describes how to protect yourself from liability risk after your sale.
A common mistake sellers make is not taking the steps necessary to ensure they are no longer liable for vehicle defects or infractions associated with the car they once owned. If the buyer doesn't register the vehicle right away and you don't inform your state you've sold the car, they could rack up parking tickets and red light camera tickets that will go to your mailbox, not theirs. Search online to see how to report the sale to your state (example for Washington State) and make sure you and your buyer sign a bill of sale. The bill of sale should state that you're selling the vehicle “as is” and without any warranty. Let's revisit the previous section for a second. If you don't verify the buyer's identity, the signatures may not be of any real value. The combination of these steps is key to releasing your liability and having the right documentation of your sale.
As a seller, the most important part of the transaction is ensuring the money you receive is legitimate and cannot be reversed later. There are more ways than ever to receive money and not all are suitable for vehicle transactions between two people that don't know each other well.
Is Cash Still King?
Accepting cash was once thought to be the best way to get paid and many articles online still suggest that using cash will protect you from fraud. Unfortunately, this is not the case. Counterfeiters have become quite skilled at creating fake bills, as one seller in New Jersey discovered the hard way. You won't discover the money is fake until you try to deposit it at your bank. This scam will continue since the scammer will then sell the car in exchange for real money, but the next buyer won't be able to register it since it would have been reported stolen. Counterfeit risks aside, it's also dangerous to carry thousands of dollars in cash to a transaction. The cash can be stolen from you or your buyer and you have no paper trail to attempt to recover it. Given the average price of a used car is around $15k, cash is definitely not king when considering these risks.
Cashier's checks and money orders suffer many of the same pitfalls as cash. They can be forged and you won't find out until you try to deposit it. Several people in the North Dakota area fell victim to this scam just a few months ago. The checks may look legitimate and will even show up in your account after depositing them. You could even start withdrawing the money, but when the bank fails to verify the check with the issuing bank, they'll pull that money back out of your account. If you've already spent some of it, your account will go negative. Read how to identify a fake check and call the issuing bank to verify it. You can also meet at your buyer's bank and watch them get the check. Don't just watch them walk out of the bank though, watch the teller hand them the check.
PayPal and Venmo
PayPal and Venmo are convenient ways to transfer money, but they don't offer protection for vehicle purchases. PayPal specifically excludes motorized vehicles from their seller protection coverage. These services also have transaction limits, $10k for PayPal and $4,999.99 for Venmo. Since most used cars cost more than this, it may not be possible to use these apps.
As the seller, be upfront with the buyer about the status of your title. You should put in your ad if you have the title or if you still owe money on your car loan. This will help earn your buyer's trust and avoid surprises that make the transaction more complicated later. If the title has been lost, you can apply at the DMV for a replacement. In some states, it is illegal to sell a car without a title, so you may need to pay off your loan or get a replacement title from the DMV beforehand.
When you use KeySavvy to get paid for your car, you're protected from these scams. We verify the buyer's identity and that the bank account used to pay actually belongs to them. We also verify the account has sufficient funds and notify you to release your vehicle only after all payments have cleared. You don't have to worry about accepting cash or cashier's checks and can focus on getting the best price for your car. KeySavvy goes further and automatically generates a bill of sale for you and your buyer to e-sign. If you have any questions during your transaction, our team is always available to help.
About Susan Crowell
When she's not researching the best ways to buy and sell cars, she's cooking, gardening, and pretending to be retired. Susan writes exclusively for KeySavvy.