How to Protect Yourself in a Private Party Car Sale

Selling your car in the private-party is one way to ensure that you’ll get thousands more than a trade-in. Follow these tips to become an informed seller and protect your transaction.

Reducing Your Risk During a Private Party Sale

Selling your vehicle in the private-party is one way to ensure that you’ll get thousands of dollars more than you would if you traded it in to the dealer. While selling in the private party takes some additional work (i.e. creating an ad, responding to sellers, and facilitating test-drives) it’s definitely worth the effort for the payoff.

There are a few tips to keep in mind when completing the sale of your car to ensure that it’s successful. Most states classify the selling of a vehicle in the private party as an “as-is” transaction, meaning that the vehicle is sold in its present condition and the seller won’t be held responsible for issues and repairs down the line. However, if it can be proven that a seller misrepresented their vehicle at any point a seller can be held liable with a “fraud claim.” This is why it’s important to create an ad that is accurate and factual.

Removing Risk from the Transaction:

  • Accuracy of listing - be accurate when it comes to factual statements, don’t say it hasn’t been in an accident if the vehicle has
  • Keep a copy of the listing and how you represented the vehicle
  • Beware of scams - do all transactions in person, in a safe place, ask for social logins before meeting
  • Visit the DMV or Secretary of State’s website for title transfer information
  • Only accept cash or verify the cashier’s check
  • Make sure the title is transferred to the buyer properly

Completing the Title Transfer:

The biggest problem that can occur is if the buyer takes possession of the car and doesn’t process the vehicle title properly. Essentially this means the sellers name will be on the title even though they’re technically not the owner anymore. If the vehicle is in an accident or the buyer abandons the vehicle, the police will be knocking on the door of the seller whose name is on the title. It’s important to keep in mind that the record isn’t permanently transferred out of your name until the DMV receives a completed application for transfer of ownership and payment of appropriate fees from the new owner.

Consulting your state’s website (DMV or Secretary of State) to see what is required in your area. Some states require a Bill of Sale and make the forms available for download others require buyers and sellers to be present to transfer the title. Consult your state's website (DMV or Secretary of State) and follow the steps that the state provides.

For instance, if you live in California, you’ll need to notify the CA Department of Motor Vehicles that you no longer own the car, complete the online Notice of Transfer and Release of Liability within 5 days of the sale. Once this is complete the buyer will need to complete the transfer of ownership.

Always listen to your gut and take the time to do your research - follow these tips and become an informed seller will protect your transaction.

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