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9 min read
Private Party Auto Purchase: Tips for Buyers
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Private Party purchases can be stressful and intimidating if you’re not prepared. Review our checklists for information that can help you buy a vehicle with confidence.
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LESSON CONTENTS
Before You Begin
- Determine your budget; consider using tools such as the Edmunds True Cost to Own® calculator and the Ent loan comparison calculator.
- Contact your local DMV to determine taxes and registration for your area; these costs need to be considered when you are deciding how much to spend.
- Identify needs vs. wants; think about the features you want and identify your priorities.
- Decide if you will pay cash for the vehicle or finance your purchase.
- If financing, contact your lender to submit your application and obtain your pre-approval so you can shop with confidence.
Quick Tip
Create a list of questions to ask the seller about the vehicle’s condition:
- Has the vehicle been involved in an accident?
- Any major repairs completed?
- What is the average gas mileage? In town vs highway?
- Did the seller purchase in or out of state? This is helpful to determine if the vehicle came from a flood-prone area or has been exposed to high amounts of salt which can create rust issues.
You Found the Car
- Look up the vehicle’s value at NADAguides.com.
- Read on-line reviews for the vehicle you want to buy:
- Consider pulling a Carfax History Report or ask the seller if they have a copy.
- Review carefully for accidents and service reports.
- Review each section of the report for concerning information and consistency with what you’re buying (e.g. mileage is lower now than what was previously reported).
- Test drive the vehicle. Make sure you meet the seller in a public, well-populated place during daylight hours.
- Ask to see the seller’s ID and review it carefully to make sure the description matches the person in front of you and the named individual on the title/registration.
- Take the vehicle to a trusted mechanic to help determine if there are any mechanical problems.
- Decide how much you want to spend for the vehicle.
What's Next?
- Ask the seller if they own the vehicle free and clear or if they have a loan against it.
- If free and clear, request a copy of the front and back of the title.
- If there is a lien, request a copy of the vehicle registration and a 20-day payoff. Obtain contact information of the lienholder so you can ask them how they will send out the title.
- Is the title to the vehicle issued by the same state you will register it in or a different state?
- If different, contact your local DMV office to determine if any additional DMV documentation will be required, like VIN verification, weight slip, etc.
- If the same, proceed according to local DMV requirements.
Title / Registration Review
- Compare the VIN listed on the title/registration to the VIN plate located on the vehicle. The number is most commonly found on the left side of the dash and is visible through the windshield.
- Make sure the individual listed on the title or registration is the person you are working with; don’t give cash or a check to anyone else.
- Compare the name listed on the title to the name listed on their ID. If there has been a name change or a misspelling, ask the seller to obtain a corrected title or registration.
- Not doing so may jeopardize your ability to complete the transfer of ownership with the DMV since the name on the title won’t match the other title documents that may be required.
- Only the individual named on the title can release interest in the vehicle. If it’s in a different name entirely you may not be working with the actual owner.
- Check for names of additional owners. All owners must release interest in the vehicle on the title unless there is an “OR” between the names. Make sure the other individual(s) will be available for the transfer of ownership.
- Review the title brands section carefully to see if the title is salvage or a total loss OR review the registration to see if the letters “SLV” are present.
- Location of title brands varies by state.
- Speak to a local dealership about the implications of owning a vehicle that has been deemed a total loss by an insurance company.
- Do not proceed if the title or registration indicates that the vehicle is salvage.
- Compare the mileage listed on the title to the odometer on the vehicle; the mileage on the vehicle can’t be less than what is listed on the title.
Quick Tip
Make sure the vehicle has a clean title by visiting vehiclehistory.gov.
Transfer of Ownership – Seller has the Free and Clear Title
- If paying cash, arrange to meet the seller in a public, well-populated place during daylight hours. The seller may suggest meeting at their financial institution so a teller can verify the cash exchange or at their local DMV office to have a title clerk assist with the transfer of ownership.
- The seller may have completed a bill of sale for you both to sign agreeing to the purchase of your vehicle or the DMV may have a form they want you to use. Check with your local DMV for specific requirements.
- Locate the transfer of ownership section on the title. There will be a place for both the buyer and seller to sign and a place to list the current mileage.
- Print your name as the buyer and sign to acknowledge the odometer reading and the sale.
- If financing at Ent, your Ent loan processor will contact you to schedule an appointment for you and your seller. Ent will help with the transfer of ownership and prepare the necessary DMV documents for you and your seller. Be aware that other lenders may not offer these services.
Title Mistakes
- Most DMVs have a form called a “Statement of Fact,” which allows the person who made a mistake on the title to write a brief statement describing the error. If your DMV does not have this form, a new title may be required.
- Requires a signature under penalty of perjury.
- The phrase “No Fraud Intended” should be included in your statement.
- Draw a single line through the error and correct your mistake.
- Any alteration or erasure in the odometer field will void the title completely, and the seller is responsible for obtaining a new title.
Transfer of Ownership – Seller has a Loan on the Vehicle
- Best practice would be to meet the seller at the financial institution where the title is housed to complete the transfer of ownership. This way the financial institution is releasing the title directly to their customer and you are present to complete the transfer of ownership. However, this may not always be possible if titles are housed out of state OR the vehicle has an electronic title (see below).
- Contact the seller’s financial institution and ask them about their policy for releasing titles. Most lienholders send the title directly to their customer – your seller. This puts you at risk because you have already released funds for the sale but don’t yet have a title.
- See if they will allow the seller to authorize the release of the title directly to you using a form your seller can sign. Confirm the authorization with the lienholder before you proceed.
- Once you have the title you still have to complete the transfer of ownership. You can either arrange to meet the seller to have them sign off OR you can check with the local DMV to see if they have a DMV POA that can be signed by the seller authorizing you to remove their name for them. This can be very complicated since the form must be completed according to DMV requirements and there can be an increased potential for mistakes.
- Does your seller have the vehicle registered in an Electronic Title (ELT) state? If so, the lienholder doesn’t hold a paper title. The lienholder will file their lien release electronically and the title will be printed by the DMV at the owner’s request only, OR the lienholder may send a paper lien release to your seller instead. The seller would then take that paper lien release to the DMV to request the title be printed. Once the title has been printed, arrange to meet with the seller to complete the transfer of ownership.
Temporary Tags, Vehicle Plates and Insurance
- The seller will remove their plates from the vehicle (does not apply in CA where the plates stay with the vehicle).
- Place a sign in the rear window stating “In Transit” and list the date of sale. Note: This does not entirely remove the risk of getting a ticket for driving without plates.
- If you paid cash and the seller gave you the title, go to your local DMV with the title and proof of insurance to complete registration.
- If you paid cash and the seller’s lienholder has the title, take your bill of sale and proof of insurance to the DMV and obtain a temporary tag.
- If you financed with Ent, go to your local DMV and obtain temporary tags. The DMV will ask to see proof of insurance. Ent will complete all of the title paperwork for you and the DMV will send you notification to register the vehicle.
- Contact your insurance agent to add the vehicle to your policy.
- Ask the seller to transfer any valid warranties on the vehicle to you.
How Can Financing with Ent Make a Private Party Purchase Easier?
- You will receive expert guidance throughout the entire process from origination to closing and titling.
- A processor with title and DMV experience will review your seller’s title or registration and prepare all of the necessary DMV documents for both you and the seller to ensure accuracy.
- Close your loan with one of our title-experienced loan processors who will guide you through the transfer of ownership right there at the closing table.
- We will ask the seller to attend the closing to better provide a seamless transaction ending with paying the seller for the vehicle with certified funds and making sure we have the necessary documentation to complete the transfer of ownership.
- We will have the seller sign DMV documents that will allow us to get a new title if needed and remove their name if necessary.
- If your seller has a loan against the vehicle we will also have them sign the documents required to ensure their current financial institution releases the title to us rather than to your seller. Once we have the title from the other lender, we will use a DMV document signed by the seller to remove their name from the title.
- Ent will collect all applicable sales tax and will file the title documents with the DMV on your behalf. We file in all 50 states!
- At closing, you will receive a letter to give to the DMV to obtain your temporary tags. Once the title documents have been completed, the DMV will notify you when it’s time register the vehicle.
- Our primary goal is to protect you and your ability to title the vehicle in your name.
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