Buying a used car from a private party can save you a lot money relative to purchasing it at a dealership. However, there are certain risks and extra work involved, not least of which is the actual exchange of money.
Let’s assume that you want the car, agree on the price, and have had the car checked by a used car specialist. Now what? How do you pay for the car?
The easiest thing to do is to pay with cash but who wants to walk around with a wad of benjis? The only legal advantage to the buyer in paying with cash is to get the seller to lower the price. OK, that might be an advantage worth paying in cash for but that’s up to you to decide.
Alternatively, a more PITA but safer approach is to meet the seller at your bank. At the bank, in the presence of the seller have the bank issue a cashier’s check in the seller’s name. There are several advantages in doing this. First, you are not carrying around a ton of cash, sweating like a pig, worried that someone is going to jack you. Second, the seller also doesn’t have to carry around the cash. Third, the seller doesn’t have to worry about the cash or cashier’s check being counterfeits. Finally, you are in a safe environment in which to make the title transfer.
Speaking of the title, this is when you want the seller to sign over the car. Make sure the VIN# and the title owner’s name are accurate, check it against their driver’s license. Check to see that the title is legit by looking for the proper watermarks. Then have the seller sign the title. In California there are two places the seller needs to sign. Finally, be sure to write in your name as the buyer because if you leave it blank anyone can enter their name and be the legal owner of the car.
We also recommend that you obtain a bill of sale so that you can prove the price paid when registering the car and thus paying the sales tax. In California there is a standard bill of sale form, but any piece of paper signed by both parties will work.
Finally, at least in California, a car must have been smoged within the last 90 days prior to registering a new owner. Typically that is taken care of by the seller.