5 must-know tips for first time private party car buyers

Don't Skip the Inspection

An inspection can save you from buying a car that needs expensive repairs and give you negotiating power.

This is our first tip for good reason. Dealerships will typically fix minor issues and perform basic maintenance on a car before they'll actually sell it. This process is called “reconditioning” and is one of the reasons dealerships need to sell cars for a higher price. Private sellers do not perform this basic level of service (neither does every dealership, but we'll save that for another time). This doesn't mean the car is necessarily in bad shape or that the seller hasn't taken care of it, it just means that the condition of the car is unknown.

An ASE certified mechanic will do a thorough pre-purchase inspection (PPI) that includes any estimates of necessary or recommended repairs. You should choose the mechanic yourself and schedule a time for the seller to meet you at their shop. Since you can expect to pay roughly $150-250 for this service, it's best to do this after a test drive so you're reasonably sure you want the car. Keep in mind that any issues found aren't necessarily a halt to the sale, but can work to your advantage for price negotiations. If you're looking for an inspection service, KeySavvy users can get 10% off an inspection with Lemon Squad.

If the seller refuses to allow a pre-purchase inspection, or insists that you take the vehicle to their preferred mechanic, they may be trying to hide serious mechanical issues with the vehicle. In most cases, if a seller won't allow you to get an inspection, it's time to find another car. Learn more about when you should get an inspection by reading our article about pre-purchase inspections.

Be Sure You Can Register the Car

Different states require different paperwork when purchasing a car, but no matter what state you live in, you'll need the vehicle's title before you can register the car in your name. Buyers beware! Scammers can create fake titles for stolen cars or to hide the fact that a bank actually has legal ownership (this is called a lien). Sometimes you will only find this out when you go to the DMV to register the car, but at this point the seller is long gone with your money. If you're using KeySavvy to pay, KeySavvy verifies the seller's identity and ownership of the vehicle to ensure it can be legally transferred before approving the sale. Note that most online marketplaces do not make this guarantee, so steer away from sellers that try to reassure you with that.

Yes, You Still Have to Pay Taxes

This may not be that surprising, but you do still have to pay taxes when you buy a car from a private seller. Make sure you consider this cost in your budget as it can add as much as 10% depending on where you live. Remember, you pay taxes where you register the car, not where you bought it, so buying a car in a tax-free state like Montana or Oregon won't let you avoid taxes if you register it in Washington. Some states have different tax rates for cars compared to regular sales tax. Search for “car sales tax in [your state]” to find your tax rate. Some states even have a calculator for taxes if they vary by county or zip code. You'll also pay a registration and licensing fee at the DMV.

Know the Car's History

Not all used cars are created equal. Get a vehicle history report via CARFAX or AutoCheck to help determine if the car is worth your time and money. Vehicle history reports will give you an idea about any major accidents, damages like floods or fires, whether it was previously stolen or recovered, title status, ownership and whether there's a lien, maintenance history, recalls, and much more. However, it's not perfect and does not disclose any accidents or repairs from shops that don't report it. So while it does provide some reassurance for buyers, it is important to still get a pre-purchase inspection. A vehicle history report will cost roughly $25 and requires the VIN or license plate, which can often be found on the car listing. Though a small additional cost, the data you get from a vehicle history can point out red flags that may steer you away from a purchase.

Buy Local and Test Drive

Buying local let's you see the car in person and kick the tires a bit.

Skipping the test drive can be a big mistake. Driving the car can expose some of the kinks and mechanical issues that become apparent only when you're behind the wheel. Things like how the brakes respond and uncomfortable blind spots may be factors that steer you away from purchasing a car. When you do meet for the test drive, make sure to meet in a public and safe place. It's also not a bad idea to bring along a friend. That will give you ample time to inspect the car without having the pressure to converse with the seller. When test driving the car, get behind the wheel. Make sure you get comfortable and drive it like you own it. Set a test-drive course that includes hills, stop-and-go traffic, freeways, and parking.

Conclusion: Have Fun!

Buying a car can be a very rewarding experience. You can get a great car for a great price. Don't forget that it's okay to walk away from a deal that doesn't feel right. Private market car sales are as-is transactions so there is no recourse if something goes wrong after a completed transaction. However, with thorough research and preparation, using KeySavvy to protect you in this process, you'll likely have a “savvy” and successful car buying experience. For more tips, read our guide for safely completing a private party purchase.