Selling a Car by Owner
Tips for Selling a Car Yourself
You really do need to protect yourself when selling a car. Most of us are not used car salespeople. We don’t put a car up for sale everyday or even every other year. The thought of trying to sell a car yourself can seem a little scary. You’re selling a valuable possession to a complete stranger, right? Are they a crook and do they know tricks that you don’t know about?
There are some pretty complex fraud schemes out there. In general, go with your gut – if something doesn’t feel right, then pass on the deal… another buyer will be by soon. It’s better to wait than get scammed.
Here are some tips and precautions to help you protect yourself when you sell a car privately.
Secure Payment
Always secure payment before you transfer ownership of the vehicle when you sell your own car. This means get their money before you sign the car over to them. Never sign your car’s title to someone in advance and never before you have payment.
Accepting Cash / No Funny Money
Cash is king! This is the best way to accept payment for a used car. Make sure it’s real cash, though – here’s a good resource:
How to Detect Counterfeit US Money (www.wikihow.com)
Accepting Checks
If you get a personal check or even a cashier’s check, then verify it with the issuing bank (not your bank… unless it’s the same bank) – the name of the bank on the check. If it’s later at night when banks are closed and they offer you a check, then you have two options. First, see if the bank has a 800 phone number that’s open all night. You might end up at a call center but see if they can help you. Second, simply wait until the next business day. Tell them you’ll hold the car until the morning. Take a photocopy or picture of the check so that you can make that phone call in the morning to the bank.
Here’s a good resource for figuring out if a check is good or not:
The best thing to do if you get a check is go with the buyer to their bank if they are local or if there’s a local branch of their bank near by. If they’re hesitant about it, then something may be up. We’re talking about a lot of money here, so don’t be “Mr. Nice Guy” and just accept it – this is business… handle it like business. It’s your money that you worked hard for.
Cashier’s Checks and Money Orders
Be a little wary about accepting a cashier’s check or money order because there’s no official design or format for one – they come in all shapes and sizes. They can vary greatly from bank to bank. This also means a crafty criminal can come up with a fake bank name and fake checks.
Even if your bank cashes the check, it’ll take a while for the check to clear, so you’re not out of the woods yet – it could still be bad. It may take days or a week or two and even though the bank accepted it, if it didn’t clear, you may be on the hook for the money and be responsible to pay it back. Yes, really.
Escrow Services
An escrow service is where a trusting third party gets involved and takes the money and title and then hands both off once they’ve been verified. There’s usually a small fee for using this service. If you decide to use one, then do some research on it and make sure it’s legit. If you’re not sure, then suggest one that does look legit and see if the buyer accepts those terms.
From KBB.com (Kelly Blue Book):
Remember these tips before you agree to use an escrow service:
- Avoid any payment or escrow service that implies an affiliation or partnership with KBB.com.
- Avoid any escrow service that claims to be operated by TRUSTe. TRUSTe doesn’t operate an escrow service.
- Verify an escrow service’s legitimacy by checking with state regulators.
- Research the escrow service.
- Decline the transaction if the other party insists on using an escrow service that you’re not sure about.
- Use a search engine to open the website in a different browser-don’t click on a link the seller provides.
- Dial the contact number listed.
- Search for the company on the Better Business Bureau website.
See Their Identification
A legit buyer shouldn’t have a problem with you seeing their driver’s license… they’re buying a car, after all. Also see one other form of identification that has their name on it. An insurance card is good because it’ll also have their address on it.
All you’re doing is verifying who they are here. They should have no problem with that. If they do, then be careful and tell them you’re not comfortable with the deal. If they want the car bad enough, showing ID should not be a problem at all. They might even ask to see yours… which is fine. Be prepared to show it.
Common Car Buying Scams
There are some well known scams to watch out for but this by no means is a complete list. Again, if something doesn’t feel right, then back out of the deal and wait for another buyer to come by.
Buying the Car, Sight-Unseen
This is when someone gives you an offer on the car without even seeing it. Most people will want to come by and inspect it and take a look at it. Sure, in today’s electronic world, more and more people are actually buying cars this way but it’s still kind of a red flag. Be especially careful if they send someone else to pick it up.
Overseas Buyers and Overpayment
You may get an email or phone call from someone overseas who needs to buy your car. Maybe they’re a soldier stationed overseas or somebody just out of the country. They may want you to ship the car and say payment is coming soon. They’ll usually pay you full price for the vehicle with no questions asked. It may seem like a deal of a lifetime, too. What often makes things worse is, they’ll pay too much for the car and then ask you to give them change or some money back… this just means their method of payment will bounce and you’ll be out even more money.
Another shady situation is they might have someone else who owes them money make a payment to you. This is definitely fishy and all of a sudden, there’s a lot of drama when all you really want is straight cash from someone who comes by, looks at the car and gives you an offer. Don’t don’t sucked into a complicated deal because that’s a good sign that it’s a scam.
Payment Plans
Someone might not have the money now but they can pay you later. This is not good… you’re not a bank. You don’t have the means to chase them down if they don’t pay you. Stay away from this deal, too.
The Craig’s List Scam
Another little scam I detail is the Craig’s List car buying scam, which is another article here on this website. Be sure to check it out.
The Mechanic Scam
If they want to take the car to a local mechanic to have it checked out, then go with them. Don’t just hold their license, which might not even be real.
The Test Drive and Purchase
Personally, I like to go with them. I let them drive but I’ll be in the passenger seat. This gives me a chance to talk with them more and address any concerns they might have. You can always give someone and their friend or parent or relative some time alone after the test drive to talk it over. Don’t feel like you have to give someone the keys to your car and have them go alone on a test drive. They might even damage the car and then it’s just your word against theirs and you can’t win that battle.
When you test drive with them, you can also give them good directions, too. Like I said, you can answer questions and give them more information while they’re driving it.
Bring your cell phone with you… just in case. You can even have someone follow you in another vehicle if you want (a good idea) – after all, they’re driving you and can go anywhere they want, basically. It’s best to not go at it alone.
Let Them Drive it?
If you do happen to want to let them test drive it alone, then get a copy of their driver’s license (photocopy it with your printer or take a picture of it with a camera or phone). You can even have them leave their set of keys with you – although if your car is of greater value, then this plan doesn’t really hold water.
Deny any strange sounding requests like if they ask you to drive the car to another location or something.
Conduct the Deal / Purchase Outside
It’s important to know where to sell a car. There’s no need to let someone you don’t know into your home. This isn’t a friend of yours or anything. Take care of business outside, on the curb. Someone planning to rob homes might not want to buy a car but just get a look in your house to see what you have and what the easiest way to get in is. They might just be casing your place to rob it later when you’re not home. It’s possible.
You should just take your residence out of the equation and conduct the deal at a local park or shopping mall or a public place like that. It’s up to you and your comfort level.
Don’t Give Away Your Keys
Don’t ever give people your car keys – you should hold on to them yourself until the deal is done and you’ve accepted payment. There are scams where people can copy your keys, so you need to hold on to them. Also, people might make the mistake of leaving a house key on their key chain or other keys and they can also be copied.
Watch for Identity Theft, Too!
If you decide to give the new buyer receipts for work you had done on the car, you might even want to blot out or cut out your address and/or signature on all those receipts to help protect yourself against identity theft.
Sign the Title Properly
Make sure you complete all the necessary paperwork to transfer ownership of the vehicle (after you have secured payment, of course). Know what is required in your state. If necessary, contact your state’s Department of Motor Vehicles and ask them what to do.
Sometimes the buyer may want you to put a lower selling price on the title so that the buyer pays less tax. I always put down the real price because that’s my signature next to it, so I’m responsible for that information. What’s fair is fair and what the law is, the law is.
Have Your Own Bill of Sale Document
I like to have them sign my own bill of sale document to explain that I don’t offer a warranty of any kind and I disclose what I’m selling them and for how much. We both print our names on it and sign one for each other. You can find automobile bill of sale documents online or I have one that I use which you can download but I’m not an attorney and you use this at your own risk.
Shake on It!
I don’t know, there’s just something about a handshake that concludes a deal and shows trust. Call me old fashioned, I guess, but I like a good, firm handshake when we reach a deal.
Conclusion
Just use your head! Use your gut, too. Be smart and be prepared for anything when you sell your own car. With most deals, there’s usually no problem at all but you never know. You don’t want to be that one person who got scammed or even hurt.
After all your work of marketing a car and getting a buyer to your door, you don’t want to see the whole deal crash down or lose a good chunk of money.
Be smart, follow these tips and you’ll be able to protect yourself when you sell a car.