How To Buy a Used Car from a Private Seller in California

I've recently gone through the process of buying a used car and thought I'd share the process I went through to complete the transaction by purchasing a car from a private seller in California.

The first thing I did when starting my used car search was to go to local dealers and sit in and test drive cars. I'm tall, so finding a car with the most leg room was the most important aspect of a car I was looking to find. I test drove many cars. Hondas, Toyotas, Mercedes, BMWs, Land Rovers, Porsches and Corvettes.

After sitting in the cars and driving them, I was able to narrow down the possible cars based on comfort alone. When you're tall, you just don't have many options. Then, I made a list of features I wanted and must haves.

• Power seats
• Navigation
• Automatic transmission
• Cruise control
• Grey or Silver color
• Leather interior
• Mileage of less than 35K
  
• Remaining warranty

After putting together a list of features, and requirements, I started searching craigslist, auto trader, eBay autos and cars.com. I find that these three services, give excellent coverage of the used cars on the market.

I also start doing some basic price research. If I find a car that I like from a dealer, I use that price as my upper bound. Second, I use kbb and edmunds to find the private party range, and I only look at used cars that are in good condition. When I'm buying a used car, I'm not looking for the best possible deal, but rather a fair deal. I'll let the seller know, I looked up the price on a few services and that the private seller price for a car in good condition and look at the miles on the car should cost this much. If they are willing to sell the car at the private party price, than I'd like to make sure I have financing in place and to take the car to have a prepurchase inspection. It's very important to have a firm price before the pre purchase inspection.

If you're going to finance your used car, then you'll need a few things to apply for a used car loan.

• The purchase price
• The vehicle identification number also called the VIN
• The payoff amount for the seller (if they owe money on the car)
• The name of the institution holding the loan and the address

I researched used car loans and the best used car loan rate I could find is through Pentagon Financial Credit Union for 2.9% for 60 months and up to $100,000. With a $20 donation, and $5 for an initial deposit, anyone can become a member. This is an incredible deal and has some of the best financial services available from credit cards to home loans. I applied for an account over the phone, but to get the special rate, I had to apply for the car loan online.  Once I was approved for the loan, then, I move on to the inspection.

The next step in the process is taking the car to a dealer to get inspected.  I take used cars to the manufacturer deal for two reasons.  First, most dealers offer the inspection at a fixed price and they have a comprehensive list of items that they check on the car.  The second reason, is dealers will give you a quote to fix items that they find wrong with the car.  

If the car is still under warranty, see if the dealer can do all of the warranty work when you take it in to get inspected.  If there are other maintenance items, like brakes, service and tires that need to be done, then you can ask the seller to take care of them, or reduce the price.  My rule of thumb for negotiating is I don't want to nickle and dime a seller.  If there are a few small items, then I don't worry about it, but if there are several things that add up to several hundred or thousands of dollars, then I ask the seller to reduce the price. 

Asking the seller to reduce the price can be a little tricky and a bit of a gamble for maintenance items.  On one side, I spent a few hundred on the inspection and he can refuse and then I may be out the money and end up without the car.  However, most people will be reasonable if I state why I'm asking for a little money out.  For example, I may tell the seller, I agreed to pay the private party price based on the car being in good condition which includes a very limited amount of needed maintenance work.  The car is requiring more maintenance work to bring it up to good quality and I like the price reduced to reflect the work that needs to be done.  I then total up the prices that the dealer gave me to do the work and ask for that much of a discount which is reasonable.  Most sellers won't give the full discount because they know that dealers charge higher prices to do things like brakes and tires which is fine.  I expect most sellers to give a credit of half.  If they do give a full credit or take care of the work, then that's an outstanding deal.

There are a handful of documents that need to be completed, sent in and taken to the DMV.  We filled out the bill of sale, a release of liability for the seller to send in, a application for title.  I also had to send in the completed loan docs which includes proof of insurance. 

Lastly, I take the documents to the DMV, pay the registration fees, and the taxes.  I also, have the maintenance work done by my mechanic once I have possession of the car.

Buying a used luxury car is a great way to get a fantastic car at a great price. Typically, luxury cars will depreciate 50% or more in three to four years. People that buy luxury cars new, tend to be older, take good care of their cars, and I can often find cars that have always been garaged, rarely carried passengers, were never smoked in and have very few miles on them. Usually many less miles than 10 thousand per year.

When I can find a car that has these qualities, I feel like I'm getting an outstanding value on a high quality vehicle. It took me about four months to find the exact car I was looking to find, with the options and a seller willing to sell the car at the private party price. When I originally made the offer at the private party price, the seller said that was too low, but a week later he called me back and said he would take the offer.