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How to Buy a Used Car: Protect Yourself When Buying a Used Car

How to Buy a Used Car: Protect Yourself When Buying a Used Car

A few weeks ago I wrote about our less than positive experience with a car dealership. Since then my wife and I have continued to look for a vehicle, and thus far, haven’t been terribly successful. We’ve gone to a few more dealerships, and while none have been as bad as the one I wrote about, most simply aren’t offering what we’re looking for: a good deal on a used car.

Lately we started to resign ourselves to just sit back and wait for a deal to show up so that we can pounce on it when it arrives, instead of actively looking so much. I was just settling into waiting longer term when one morning just after I arrived at work, I got an email from my wife saying that she found what looks like a good deal on craigslist. She called the gentleman, and he agreed to meet us after I was done work.

We met up with the seller, test drove the car, and everything looked great. At this point, I hadn’t really thought about what would happen beyond this point, as I figured something would be wrong with the car that would make me want to walk away, but nothing was. So I stepped out of the car, and I froze. To be honest, I didn’t know what to do. How do I buy a used vehicle in a private sale? Do I just write them a check and they hand me the keys? Do I need to fill out any paperwork? Do I pay tax on the purchase?

For most people, this might not be a problem, but for a young couple who has never purchased a vehicle before, buying from a dealership offers at least a sense of security that you can’t get from a private sale. If you’re unhappy with your purchase, there’s a phone number to call to complain to. If you drive it off the lot and experience immediate regret, most dealerships will take the car back if you return it within a day or two. If you’re struggling with understanding financing, or how the car buying process works, you’re dealing with professionals that do this for a living – they can help you. You don’t have any of those services when you buy a car directly from the owner.

So all of this is running through my head as I stand in front of the gentleman who is selling his vehicle. I do what I can to inquire about the origins of the vehicle, about why he is selling the car, and I inspect the vehicle as best I can. The problem is, through the back of my head, there’s this little voice that’s telling me, “It could all be a lie”. The sad, simple fact is: it could be. The seller advertised the car on craigslist, and while he seems very open and honest and straightforward, I just don’t know for sure. I’ve heard stories of cars that were submerged in a lake for a month being fixed up and sold. I’ve heard of friend’s who bought cars, drove them for years before finding out that they were stolen. I’ve read stories about craigslist scams, shady dealings, and all sorts of horror stories from private used car sales.

So coming home that night I did a bunch of research on what I can do to overcome these obstacles. First, one can use a service like CarProof to alleviate most of these fears. CarProof is a vehicle history reporting service. Basically they provide the entire history of the vehicle, including former owners, regular odometer checks, any repairs that have been done, if the vehicle has ever been reported as stolen, a lien check, insurance and accident claims information, the list goes on. If you’re worried the car has ever been in an accident CarProof will tell you. If you’re worried the car is stolen, CarProof will tell you. While the service isn’t exactly cheap, at around $65, it is a worthwhile investment for a purchase that could easily go into the tens of thousands of dollars.

A second important task to take on when purchasing a used vehicle in a private sale is a mechanical inspection. For this, you have a couple of options. You can look it over yourself, you can bring someone with you, or you can bring the car to a mechanic to have a look at the vehicle. We have explored a couple of these options with the car seller, and we decided to purchase an inspection from BCAA, the British Columbia Automobile Association. Essentially, they provide a service where they will meet you at the location of the vehicle and do a 141 point inspection. This will cost about $150, which is certainly not a throwaway amount. It costs enough that you wouldn’t want to do it on just any car you’re looking at, but not so much that it isn’t worth the cost when you’re sure you want to buy a car. While we would have preferred to take it to the manufacturer’s dealership, the seller was hesitant because of time constraints, so we compromised by bringing the mechanic to the vehicle.

Again, like getting a vehicle history report, obtaining a mechanical inspection is a pretty crucial part of buying a used car. It will give you a great overall picture of the state of the car, everything from whether or not the frame is bent, to the amount of life left on the tires and brakes. Not only will this give you the best picture as to whether or not you should buy the car, it can also give you an edge in negotiating the final price of the vehicle, where you can point to upcoming necessary repairs.

These two steps are the best preliminary steps that you can take towards the purchase of a used vehicle. It will give you the full information required to purchase the vehicle, as it will offer you an extensive history of the vehicle, as well as a snapshot of the vehicle’s health at the time of purchase. Based on this information, you can choose whether or not to take the next step towards the purchase of the vehicle.

Learn From Others’ Mistakes

I never knew just how long it would take, and how difficult it would be, buying a used car. Being that I was a complete car buying novice, I did not realize that car purchasing was a lengthy process, fraught with anger, disappointment, and frustration. After my wife and I found what seemed to be a good deal on craigslist, we did a test drive, and made sure that we were protected by getting a vehicle history report and a mechanical inspection. Everything seemed to be just perfect, and we were willing to buy the car. The problem was, we had no idea what to do next. To further complicate matters, the seller was an immigrant to Canada and did not know the process either.

No problem, we thought, Google will solve all of our problems. We looked up through our local insurance agency what steps we had to take, arranged a time to meet with the seller, and decided to do everything in one day. Unfortunately, a number of problems arose.

First, we had to get access to our money. Again, this shouldn’t be an issue, as we had already transferred all our savings from our online bank account to our chequing account. There was a branch not two blocks from the sellers house, so we would stop by and get the money on our way there. Except when we got there, the branch was closed. Not only that, because it was the Saturday of a long weekend, every single branch was closed. Yes, we definitely should have thought of that ahead of time, but we didn’t, as we are new to this whole process. Simply writing a cheque would have been convenient for us, but obviously the seller would not want to accept the promise of money in exchange for his vehicle.

So we went to the post office in an attempt to buy money orders, but for some strange reason, the post office will only sell you money orders up to the amount of $999.99. Therefore we would have to buy many multiples of them, at $5.50 each. Okay, well, that’s the price we pay for being stupid, right? Except the transaction won’t go through. I guess there is some sort of limit on our account that won’t let us debit quite a few thousand of dollars. Well then, we thought to ourselves, let’s just do them one at a time. Hurray! The first one works. Boo! The second one didn’t.

That ended that long day of frustration and not being able to buy the car that we had the money for, but simply could not get access to. We even tried calling their call center, but of course, that was closed too. Honestly, doing my banking through a credit union is a wonderful thing, except when it comes to situations like these. All the major banks were still in business on the Saturday of a long weekend, just not our small local credit union.

So after the long weekend we decide to try to buy the car again. Luckily for us the seller wasn’t in a rush to sell it, and was content to wait for us to get him the money. This time the bank was open. We were actually able to save enough that by raiding our emergency fund we could pay for the car outright. So we got a registered check for the majority of the cost of the vehicle, had a money order for another thousand, and got cash just in case we were able to bring down the price of the vehicle through negotiation, as the mechanical inspection revealed that the tires would need to be replaced quite soon.

So on the Tuesday, we met with the seller and started to go over the paperwork that needed to be filled out. At this point, we realized that his wife was on the registration of the vehicle, and as such, would need to sign off on the sale of the car. Except she’s at work, and won’t be home for another couple of hours. Perfect. Just in time for all the insurance places to close, and prevent us from getting our vehicle yet again. So in desperation, we end up calling an insurance salesperson who I found about through a coworker. She offers the wonderful service of doing all the registration paperwork for you, and will meet you anywhere you want, but the problem was that her insurance quote was $30/month more expensive than any other place we asked. But we wanted the car, so we called her anyways, and a few hectic hours later we were driving home in our new vehicle.

Oh, and as for negotiating, it lasted about 30 seconds when I made the offer to split the cost of new tires with the seller, and he said no, the price was not negotiable. Fair enough.
Regardless, the sale of the vehicle finally went through, and we are now the proud owners of a slightly used vehicle. It has (almost) all the features we wanted, is the fancy classy model, has really, really nice floor mats, and was the perfect price. Now we just have to worry about paying for insurance, and gas, and maintaining the vehicle, and not getting into an accident… oh dear.

Tips For Buying a Used Car in a Private Sale

  • Negotiate the final cost of the vehicle before you are invested in the car. If you wait as long as I did, then when they simply say “no”, you have no bargaining room to walk away or threaten to leave.
  • Get a registered cheque ahead of time. Don’t wait until the last minute. If you’re not sure on the final cost of the vehicle, get one for the cost as you plan on initially offering, and bring cash for the rest of the asking price (or up until what you are comfortable with paying for the car).
  • Don’t use money orders, because if you’re buying a $15,000 car, and you have to pay $5.50 for each money order, then that would be $82.50 in extra fees that you’re tacking on yourself.
  • Go over the paperwork. Know who has to sign what, and make sure that all the parties involved are there at the time of sale.

Learn from my mistakes!

Comments

  1. Joe Plemon

    I have had very good success purchasing privately owned used cars. This being said, I think your concerns about being lied to are valid and (although I haven’t used the service) Carproof sounds like a good idea. Hiring a mechanic is also great advice.

    Before I purchased my current car (1999 Cadillac DeVille) I learned online (I don’t remember where) how to access a computer code that tells what current and past problems the car has had. The readout was on the dash, all in coded language, but the web site told me what to look for. All was well and my car been wonderfully trouble free for three years now.

  2. Jason @ One Money Design

    Great tips here. Thanks for sharing your story. I bought a used car a few years ago and used an online service to check vehicle history. That service alone helped me pass on a few cars with bad history. I definitely like the idea of having someone else close the deal such as the bank or credit union. Flexibility by both parties is key. If the seller isn’t flexible or won’t agree to a mechanic, etc, it’s definitely best to walk away. Added this to my roundup tomorrow. 🙂

  3. James

    buying a car is a big deal and typically is going to be a large transaction. buying in person i would recommend a few things- ask if the person is ok with you taking the car to your mechanic for a through inspection. For $100 a mechanic can give you the answers you need and help set you at easy on the purchase.

    Second is ensure that the title is real and the person has the ability to sign it over to you for a smooth purchase.

    lastly is a new one to me but you have to notify the DMV of a proof of sale. this does mean that you have to pay taxes on the car similar to at a dealership.

    good luck and remember the number #1 thing to follow is your gut instinct.

  4. Jerry Hung

    Oh, you could buy a used car from the car dealers (Private or not)

    Then you swipe your CC/debit for deposit, and come back later with Certified Cheque to pay the rest

    Still have to do all your due diligences of course, but I don’t think I’ll ever buy from a private seller (and I bought/owned 2 used cars)

  5. In the mortgage business, we always had people take out a certified check for the bulk of the cash to close, then bring a personal check for the difference, which might be a few hundred dollars. You usually know the basic price, so it may be worth having the cert check ready.

    In the case of a car, the odd amount could be paid in cash, but make sure you get a receipt.

    Curious though, who did you get to do the mechanical inspection, and where did they do it???

    • Alan Schram

      We got BCAA (British Columbia Automobile Association) to come to the seller’s house and do the mechanical inspection on his property. We would have brought it to a dealership but the seller didn’t want to be without his vehicle for that long.

  6. Jackie

    Wow, what a lot of trouble. Glad you got it all resolved though and came home with the car.

    The only used car I bought for myself (my current car) was bought from a dealer using credit union financing, so that was a different story.

  7. Car Negotiation Coach

    Sorry to hear about all the troubles.

    I’d also strongly suggest getting a vehicle history report before buying any used car….can save big headaches down the road.

  8. Pete

    I’ve bought used cars only. I’d never touch a new car or even a fairly new one. Weeks from now my newest car will be an 89. But I do my own car work and I know what I’m doing thanks to google etc. Anybody can.

    First car was $1500. Only saw the mechanic for e-tests, and one muffler job when I was a noobie at mechanics.

    Second was $100 for a van 4 years ago. I still drive it, it’s great.

    Third was $400. I anticipate getting many years out of it.

    My cars are ugly, rusty, they have exhaust leaks, sometimes doors won’t open or close. But above all else they are very cheap, and they have proven to be reliable since I maintain them myself. Having said that I’ll probably be lying outside in the rain tonight trying to reattach my muffler.

  9. Bucksome Boomer

    Thanks for sharing your lesson learned with us. I haven’t bought a used vehicle in a long time but plan to next time we replace one.

  10. Delroy

    With an increase in the craze for buying used cars people tend to get a wrong deal. There are many websites such as Craiglist which allow normal people to list their vehicles as a “free listing”. There is no proof of reality about the person listing the vehicle.

    If you want to buy a vehicle then you should rely on the famous websites such as eBay and other dealers website. I always try to authenticate the information provided by the dealer or seller on the listing page before bidding or going for a purchase.

    Just get a whole info about the VIN, location, registration details, price and payment options.

  11. Scott

    Getting your used car checked by a reputable mechanic is important. Used car buying doesn’t have to be daunting, you just need to be prepared and shop where you trust the dealer.

  12. Scott

    The last truck we purchased was used. We had it checked out by our own mechanic, and we are on the 4th year of owning it trouble free. Have someone make sure that the vehicle is running well and keep up on your maintenance.

  13. Jaycee

    I purchased a used car for $7,000. I had it checked ok by a mechanic for $125.00 and it checked out ok. They did say that it needed general maintenance and belts changed.

    So I purchased it and then paid another $150 to have the belts and such changed. 6 months later I had problems that cost me %1,200 then another $900 problem 5 months later.

    It seems ok now, but you never can tell I guess, even with due diligence.

  14. Sammy

    Used Cars are better now than they ever were. We haven’t bought a new car for years. As long as you do your homework, you won’t have any preoblems.

  15. Niko

    I had the same problem when I bought my car. I did all inspections, all checks but at the moment of buying, the sellers make copies on paper of my credit card. I did not know what to do. So I changed my credit card. The car is still working perfectly!

  16. Thomas

    When ever I purchase a car it is usually a private sale either from Craigslist, the newspaper or Auto-Trader. I have come to find that I get the very best deals and I usually just send my mechanic to go look at the car for me. Its a tricky situation but you just have to be prepared. I find it easier to pay my mechanic then to end up with a lemon that will just cost me more money in the long run.

  17. Michelle

    We did all the things mentioned above and bought a 1997 Intrepid with 115,000km for $2000. Two weeks later it was dead. Crank shaft broke. Our two options are to take it to the wreckers or buy a new motor. Do we have any legal protection here? We went back to the people we bought it from and asked to split the difference. Any ideas? Thanks all.
    Michelle

    • dMAN

      If you test drove the car and it was alright, and you then decided to buy and register the car in your name, then any future problems and repairs are your responsibility, Not the previous owners.

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  19. Abeyja

    Yes buying a second hand car is really risky. Be conscious when buying an n used car, it should be private. Always buy a used car from a reputed firm or known one. Then the risk will minimum. Before going through this please check the details about the used car.
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  21. troy

    i bought a 2004 montana van and on the way home about 25 km away from where i bought it it overhested and the macanic said it needs 2 neew head gaskits over 1000 dollars i live in moncton new brunswick canada and the man i bought it from is a lawyer and went out of town for 2 weeks does any body know if i have options or any kind of warranty

  22. mirena

    Remarkable things here. I am very glad to see your post.
    Thank you so much and I am taking a look ahead to touch you.
    Will you kindly drop me a mail?

  23. nicole

    i I bought a car for $2000 I gave $1000 cash when I picked it up and received a receipt for deposit. I was told by the seller to go get an inspection which I did only to discover there was way more issues then I was told by the seller. I told her that I am not paying anymore for the car. its not worth it. she then told me that she is not signing the ownership over and that she will be taking the car without giving me the $1000 back. is she allowed to take the car back without giving the $1000 back, and if she does what can I do about it. nicole

  24. Max

    Thank you Alan for sharing your experience with us and the great guidelines. I bought my first used cars directly from a user and that really was a very bad experience for me. The car had lot of faults that surfaced within few days after purchase and he had few papers missing as well. It was a horrible experience.

    I had to buy a another one so i did some research this time on used cars dealer in winnipeg (my present location) and came across a company named Used Cars Winnipeg (www.usedcarswinnipeg.com) They had really good inventory selection and they actually walked me through the process and i have been using the car for almost a year and so far its running really good. Had some minor battery issues but i guess i am to be blamed partially for that.

  25. Les

    I have a different problem.
    I bought a motorcycle and transfered title and paid the sales tax. I was very happy. I paid with cash and emt cause that was the easiest way. I didn’t realize that emt is not traceable so I was told by the seller. And since I paid cash and emt that it looks like he was never paid. He feels he can say I forged his signature on the title transfer document and will report it stolen. Then he asked for more cash. I have not done anything yet. Despite feeling secure in the transfer of title initially I feel I should have obtained a bill of sale as well stating payment and no further financial interest by the seller.

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