Practicalities of Selling a Used Car

A friend of mine is thinking of buying a new car (really a nicer used car) and we got to talking about selling a used car and how certain aspects of it would work. For instance, let's say I wanted to sell my current car in a private sale (not to a business or a dealership.) How would I handle the following:

• The test drive

• Allowing the potential buyer to have the car for a mechanic's check-up

Each of these requires me to do something that's not usually considered a wise financial move: give a highly valued asset to a complete stranger. Yikes!

So my friend and I talk about the issue. For the test drive, he thinks that if the potential buyer leaves his car at your place, then it's ok to let him drive off in your car (going with him is a whole different issue -- do you really want to be in a car with a driver of unknown ability?) I agree that this would work if the other guy has a Lexus and he's buying a Corolla, but what if he's driving a junker? He may just take off and leave you with it -- nice trade for him.

And let's say you get past that issue and he wants to buy the car. But first, he wants to take it to a mechanic and have it checked out. This is going to require you to either go to the mechanic as well or turn your car over to him for a good period of time, during which you don't have your car. That doesn't sound wise or convenient.

I know there are some used car sellers out there who have handled this issue with success. What do you do? Simply trust the person? Only get leads from friends? Something else?

Please share your thoughts in the comments section below.

Comments

[Jon]

Usually, by the time I'm ready to sell a used vehicle, it's worth under $500, so I don't worry a whole lot about giving someone the keys. If they want to rip me off that badly, they're welcome to the car. I'm done with it, and have already purchased a newer, nicer vehicle. As far as the mechanic looking at it, I'll give them a laundry list of everything I know that needs work up front, so they generally know what they're buying.

[Apex]

As for a mechanic checkup I am not sure how I would handle that, probably wouldn't allow it, but for the test drive there should be no real issues. He leaves both his car and his license. Even if he has a junker, if he takes off with the car and doesn't come back it's grand theft auto and he left his calling card. Unless the guy is a complete idiot, thats a really bad trade he just made. a few days of a slightly better car for 5-10 in the state pen.

[Angie]

I've been thinking about selling my car also, and I have been thinking of the same issues. Am I really going to hand my 25k car over to a no-name for a test drive? Who knows how they will treat it and if/when they will come back. You can't have them driving without their liscense either.

[LyndaS]

The test drive I would go along with the buyer. If he/she gets into an accident I want my car repaired, if I'm in the car at least my insurance would pay to get the car fixed or call buyer insurance company to verify coverage before I would hand over my keys. I'm up in the air about the mechanic visit...I'm sure I would tag along. But another question do you only accept cash for your vechile or cashier check or something else? The last thing you want is to be out the money and the car.

[mark]

It does not need to be complicated. For the test drive, I make a copy of the driver's license and they leave their car and keys, although it has never been a vehicle of higher value. You do have to have some reciprocal trust as they should trust you for condition of the car. For the mechanic review, I take it myself to the mechanic of their choice or I take it to a mechanic in advance of a possible sale with a report of concerns. Inconvenient? Yes, but necessary to extract the best value from the vehicle. If you need to let them take it, take a sizeable deposit ($500-$1000) and copy of license.

[Wise Money Matters]

The last car I sold to a private buyer I just made a copy of his driver's license. Now I have all of his information. In that case he also left his truck which was worth significantly more than the van I was selling (he was buying it for his daughter).

[jeff]

I have sold many cars and I always ride in the car during the test drive. and as far as the mechanic goes I only allow them to send mechanic usually one that operates out of their car. it is not worth my time to take it to a mechanic and because might not buy the car.

[Rick]

Regarding the second comment, you can't force the guy to leave his driver's license with you while he's on a test drive. The law requires one to carry his license with him while he's driving, so if he left it with you, he would be driving illegally.

[justatron]

I sold my car a few months ago on Craigslist. I went with the buyer on the test drive and had her meet me at work instead of at my home. She didn't ask to take it to a mechanic so that wasn't an issue for us. The buyer paid me in cash and met me at my credit union to sign the title when we did the transaction. It wasn't a difficult process for me at all, but I am still a little surprised the buyer didn't check out my car any more than she did. Granted, it was a high mileage Toyota, but I would still have at least brought along a mechanically-inclined friend to look the car over before I bought it.

[Apex]

Leaving the license may be a legal problem as Rick suggested so my suggestion for that would probably be better handled by the suggestions above that just make a photo copy. The point is to have all their license info not so much the physical license.

To the comment about riding along to ensure the car is insured, thats not necessary in my state anyway (Minnesota). Auto insurance follows the car and has nothing to do with who is in the car or who happens to be driving at the time of the accident. If it didn't then if you borrowed your car to your parent, sibling, friend, etc, you wouldn't be insured. I don't know of any place where that is true.

[Blaine Moore]

I'm a typical Mainer - you don't want a vehicle I owned by the time I'm done w/it. I drive it and I maintain it well until something comes up where it will cost well more than the vehicle is worth.

Then I buy a new vehicle (until my last purchase a used vehicle, but nothing met my standards for what I'd buy w/o being w/i ~$2000 of getting a new vehicle) and donate my old vehicle to charity, where they can have somebody volunteer their labor to fix it up and sell it at auction.

The last time that I did that my truck was worth about $1000 if I did $1200 worth of work on it and it sold at auction for a $1700 tax write-off.

Did I make the most I possibly could have? Maybe, maybe not. Did I help a worthy organization while getting a good tax write off for myself? Certainly.

Did the person who bought the truck get screwed? I hope not. I disclosed that it had been sideswiped by a tow truck a year and a half prior to my donating the truck; whether they disclosed that or not I couldn't tell you. It did come with a $700 cap installed on it that was probably still worth a few hundred dollars.

[J]

Interesting topic. Anyone have any experience selling their used car to a place like CarMax to avoid these hassles of a private buyer transaction?

[Angie]

I've heard car max will typcially just offer you 3-5k under the kbb trade in value. Which, in my mind makes it worth the effort to sell it yourself in my opinion.

[Patrick]

You'd better make sure your car is insured if you're letting a stranger drive it.

[Apex]

Patrick is absolutely correct. You must carry insurance on your car if you let someone drive it (as I explained above, insurance follows the car, not the driver). You have not only damage exposure but liability exposure.

[Laura S.]

When I bought my Matrix last year, the dealer only wanted to give us $1500 for our trade (a 10 yr old Sienna minivan). We sold it ourselves for $3000. Not bad for a couple hours of work. We had lots of calls but the first person that test drove it with my husband in the van bought it. The interesting part was that the buyer didn't speak English very well. He wanted us to go to a place that helps Mexicans with things like that. We did talk to the translator but we chose to meet him at the court house to do the transfer. He gave us cash so that worked well. When all was done he told my husband he was a 'straight arrow' because he would only do everything by the book.

[Param]

CASH - No No - what if you end up with counterfeit notes of that huge amount???
Check - Unless they agree to pick up the car after the check is cleared, it is too risky.

Cashier's Check is the most recommended option & practical too. It costs hardly 5$ for around 3k$. I would even be willing to pay that if I was the seller.

[David R.]

I bought my car for $1,600 through a private transaction in August 2004. The sellers had listed the car, a '97 Ford Escort with 70,000 miles, at that price in the local paper's classified ad section.

I met them at their house where they showed me the vehicle. I popped the hood with the engine off and checked for obvious damage such as cracked hoses, rust, leaks, overflowing battery acid, etc.

I then opened all the doors and saw the interior was clean. Ditto the trunk. I turned on the engine and cranked the tires all the way to the right. I got out and checked the CV joints for obvious damage - they were fine. Ditto with the tires cranked to the left.

At this point I got on my back with the engine still running and checked out the bottom of the car. No Bondo holding everything together, no leaks, no deep rust. All clear.

I then suggested we go for a test drive, and one of the sellers came with me. We took it through the neighborhood and hopped on the interstate for a couple miles, then came back the same way. Here I was listening for strange noises and smelling for anything abnormal or burning.

The only problem I could detect with the car was bad brakes - they were squealing pretty hard. (I had a mechanic replace the pads for $100 shortly after I bought the car.)

After agreeing that the seller's price was fair (I would have paid $2,000 no problem), they simply signed the title over to me when I handed them the cash. They then removed the license plates and gave me the keys. I left the car at their house while I went with my brother in his car to the state DMV, where we registered the vehicle and had proof of insurance faxed to the DMV office. The DMV handed the new plates over then and there, my brother took me back, I put the plates on, and I drove my new car home.

My take:
* Sellers should go with the buyers on a test drive. It's not at all offensive or a hassle. In fact, I think it's expected.

* An all-cash transaction is probably best if everyone agrees to the deal as is. Cash is king.

* If the buyer does not have another person/vehicle with them, the seller might do well to offer him or her a ride to the DMV. The seller does not want the buyer to drive the vehicle with the old tags on it, and the buyer does not want to drive a vehicle with no tags period.

P.S. My car is still running strong nearly five years and 34,000 miles later. No major engine or transmission work in all that time. I still get a kick out of having a CD player and working A/C.

P.P.S. I maintain low annual mileage by riding my bike for most distances under two miles, including my commute to work. My comfy commuter bicycle cost $848 with taxes - a great investment for my finances and my health!

[Eric]

Wow...I actually never really thought about this. How did you sell your cars in the past FMF? How did you deal with these two issues?

[FMF]

Eric --

I've always given my cars to either family or a charity.

[Bill]

This whole thing reminds me of the late night commercial where the simplest task is made hopelessly difficult (e.g. the horror of putting on pants...first you have to pick out pants and hope they are clean...don't forget underwear... and then you have to pull them up and hold them while simultaneously buckling a complicated belt..and then the dreaded fly catching on private parts getting stuck etc....who can live with such difficulty...now with SuperPant you don't have to!!!)

Come on...getting counterfiet cash? having to take a test drive with someone?

OK it is possible to have a problem here, but come on.... millions of cars are sold by private parties every year. Driving without a license is illegal...when was the last time you got pulled over? Do you drive 1 mph over the limit...that's illegal.

Selling a car as David R described is simple and a very common method. Take cash...cashiers checks can be fake...do you know what a real one looks like...I know what a $100 bill looks like. Do the transaction in the bank so you know the cash is good. I personally take PayPal (or pay with Paypal) to make it easy.

Saving 1000's by selling yourself is well worth the minor risk. The mechanic thing is tougher, but you could also make the sale contingent on inspection or take a decent sized deposit.

[lurker carl]

If the vehicle is still in decent running condition, I send it to a state certified inspection facility and fix whatever needs attention to pass the inspection. That saves me the hassle of dealing with tire-kickers and a buyer the hassle of mechanical unknowns. It also pays to keep the service records that shows a maintenance schedule and repair history for the vehicle.

Usually, the vehicle is a worn out junker and sold "as is." I give prospective buyers a written paper of the known problems the vehicle has. If no one wants it, away to the junkyard.

I often drive the vehicle to the new owner's home and remove the tags. They have the inspection certificate, signed title and bill of sale; and a long day at the DMV to apply for the new title and tags.

[Foobarista]

One approach is to have the mechanic inspection done before you sell the car, so you know any issues up front. In California, CSAA will do this for about $50. Also, if relevant, you may want to get an up-to-date smog cert, which is required in CA to transfer title.

[Greg]

One additional note on test drives: If you hand the keys to someone and they take off with your car, it may not be considered theft (check your local laws).

Here in South Carolina, a man went to meet a couple who wanted to buy his vehicle. They kidnapped and murdered him, and stole the car.

Ladies: Have your father, brother, boy friend, or some other guy with you if you meet with someone. Even if all they do is stand around with their hands in pockets, it helps keep the creepier types in check.