When You Buy a Used Car
If you buy a used car from a dealership, the dealer will handle all the paperwork and register the car for you. In private-party sales, the seller and buyer handle the paperwork themselves. While there are many small steps to closing a used car sale, the big picture is this: You as the buyer need to obtain proof that you legally purchased the car and get a statement of what you paid for it.
Where To Finalize the Transaction
Most people successfully buy a used car at the seller's home or office. However, since you will be handling payment for the car, a bank's lobby makes a nice neutral meeting place. Often, you can also ask bank workers to make photocopies of the documents if necessary.
If There Is a Lien on the Car
In some cases, the car you are buying might have a lien on it. That means the bank or lender is in possession of the title. Banks often handle this kind of used-vehicle sale, so check with the bank to learn exactly how to proceed. Essentially, the seller will need to make sure that the balance of the loan is paid off before the car is transferred to you as the buyer. This might take some time and delay the sale.
One way to deal with this situation is to conclude the sale at the bank that holds the title. The seller can call ahead and ask the bank to have the title ready. Then, once money has changed hands and the bank has been paid the balance of the loan, the seller can sign the title over to you.
Beware of Fraud
Buyers need to be particularly cautious when buying a car sight unseen from an online auction. That process is more complicated and you could be the target of scammers.
Used Car Buyer's Checklist
- Get a smog test from the seller (if required by your state).
- Make sure that the registration is current or you could be held responsible for late fees.
- Ask the seller to sign the title (also called the "pink slip") and record all the information, such as odometer readings, properly. (In some states you might need a transfer-of-ownership document, which is attached to the title.)
- Have the seller fill out a bill of sale if required in your state. You can show this to the police if you are stopped right after the sale.
- Pay state sales tax when the car is registered.
- Activate or update your insurance policy.