This used car buying/selling guide is the most informative in-depth article ever published about motor vehicle buying and selling. Published by a retired used car dealer, Doc will guide you through the online car buying process for a rewarding experience!
Be sure to read this guide before buying or selling automobiles online! 😉
Table of contents: Avoiding Fraud | Private Party Purchases | Purchasing From Dealers | Buying From Wholesalers | eBay Motors Vehicle Purchase Protection Program (VPP) | Newbie Car Dealers | Rebuilt and Salvage Title Vehicles | Vehicle History Reports | Vehicle Warranty | Vehicle Inspection | Buying Older Automobiles | Odometer Fraud | Vehicle Sales Tax | Making Safe Vehicle Payment | Advice For Sellers.
Buying a car from a private seller: Beware of private sellers that buy and sell vehicles without being licensed. Flipping vehicles from one owner to another. This kind of seller is an unlicensed used car dealer AKA the Curbstoner.
Example of a curbstoner. Buyer A the curbstoner buys a car from a little old lady in a local newspaper. Instead of going to the DMV and transferring that title into his name, the curbstoner resells the car to Buyer B.
Buyer B prints his name on the back of the title but does not go to the DVM and transfer the title into his name. Instead, buyer B has done a few repairs and cleaned the car up. then decides to sell it.
In this situation, buyer B becomes seller B and sells the car to Buyer C who is in another state. Seller B crosses his name out on the back of the title and writes Buyer C’s name over his crossed-out name.
Seller B then hands the title to Buyer C who takes it to his tag office to transfer the title. The title clerk takes one look at that crossed-out name and rejects the title for transfer.
style=”font-weight: normal;”>Here is where the paperwork nightmare begins for used car buyer C. Buyer C’s motor vehicle bureau tells him to contact the previous owner whose name is printed on the title. Buyer A would be required to transfer this title into his/her name, pay any taxes due, yadda, yadda, yadda, then sign the new title they receive over to Buyer B who would repeat this process and sign the title over to Buyer C.
style=”font-weight: normal;”>The problem is the little old lady that sold the car has no idea to who she sold the car to. Buyer A paid her cash and had her sign off as the seller. By law, this car is Legally Still Titled in Her Name. If that car is used in a crime or involved in an accident, the police will come to her. It’s an absolute paperwork nightmare. Often it’s easier to get the registered owner to file for a duplicate title. Then sign it over to the person trying to title it in their name. Though a motor vehicle bureau official will not tell anyone this because it’s considered illegal. Any way you look at it, it’s buyer C’s absolute nightmare getting a transferable title.
TIP to avoid a non-transferable title situation: Vehicles are referred to as “Titled Property.” By law a motor vehicle can only be legally sold by it’s registered owner or a licensed dealer.
Doc advises anyone who is buying a used car long distance on the Internet from a private seller to request title documentation. Ask for a fax or email attach of “both sides of the title, along with a copy of the sellers drivers license or photo ID.” This is the best proof a long distance buyer can get proving the vehicle is titled in the sellers name. If the person selling the vehicle is not the registered owner – it’s not his car to sell!
If the buyer and seller are in the same state go with the seller to the motor vehicle bureau (DMV) to transfer the title. And do not hand over the cash until the title clerk says the title is OK to transfer.
An audio clip from Doc explaining why buyer should ask seller for photo ID.
Curbstoning got so bad on eBay Motors that the auction house modified its Vehicle Purchase Protection Program (VPP) coverage to exclude curbstoners rather than set sale limits on private vehicle sellers. This means “buying a car and receiving title – but not being able to transfer it” (The Curbstoner Exclusion.) If you end up with a curbstoner car you might be stuck with a nontransferable title vehicle.
The only possible solution would be to locate the registered owner. Have that person apply for a duplicate title and sign it over to you. Or file a suit against the seller. Attorneys are not cheap, and even if you manage to get a judgment it may be impossible to collect it. Add attorneys fees and court costs and the cost could exceed the value of the vehicle. So Just Beware!
Old Collector Cars are common for having open titles. Lots of these cars are either for parts or non-running. Or was it was project someone started to restore but never completed? Others are restored but never titled in the owner’s name. The car’s buyer bought it as an investment and didn’t want to pay the taxes and registration fees. It’s not uncommon to see a collector car go through a half dozen owners without a title transfer. If a collector car’s title has an error or gets lost it can be a nightmare getting a duplicate issued.
Buying a Car on eBay Motors: eBay offers up to $100,000 Vehicle Purchase Protection (VPP) on covered vehicles purchased from their Motors Venue. VPP is worth its weight in Gold for certain coverages such as. Buying a car that is stolen. Buying a car with an undisclosed lien. However, It only covers vehicles up to 10 years old. Covers buyers in the U.S.A and Canada only. And has a ton of exclusions. Anyone that’s considering buying a car on eBay Motors should read the coverage and exclusions fine print . VPP is not a substitute for good old common sense. Buyers should contact sellers and ask whatever questions they have. Buyers should also have the vehicle inspected, before bidding or purchasing.
Buying a car from a licensed dealer: A dealer most likely will want more for a car than a private seller. It’s a safe bet that the title will be proper and should be no problem to transfer. Dealers are licensed and also bonded in most states. But it’s still advisable to verify the dealer has a physical location. If so it’s a safe bet that you will not drive up to an abandoned building or vacant lot somewhere after sending payment for a car.
Buying cars from Wholesalers: It’s also common in the car business to have wholesalers working off another dealer’s license. The wholesaler usually pays a draft fee to use the dealer’s funding. And to gain auction access to source their cars. Lots of dealer cars are offered by wholesalers on the Internet. The wholesaler can issue temporary tags and deliver a car as a dealer’s agent. Plus the dealer is responsible for his agent’s actions. So buying from a wholesaler is a safe bet to deal with on a long-distance transaction.
Independent Dealers buy most of their cars at Dealer Auctions. These days the greatest majority of Franchised Dealers send all their trade-ins to the auction.
This accomplishes two things. It keeps their used car managers from taking money under the table and selling trades to their friends at a reduced price. Auctions also ensure the dealership will get top dollar for a nice trade-in unit. Vehicles are also sold as repossessions by banks and finance companies. Wholesalers selling made-up cars. And non franchised dealers swap the units they can’t sell among each other.
Older cars are mostly sold on the “red light” AS-IS with No Warranty. Dealers sell online lists and sell them the same way they buy them – AS-IS! When the auctioneer’s gavel falls and he hollers SOLD! Someone is the proud owner of that unit with any and all faults it may have. If it doesn’t have a reverse that’s too bad. There is no crying in the office about it. Lots of these kinds of vehicles end up for sale on the Internet! This is where a vehicle Inspection can be worth its weight in gold!
Becoming a new used car dealer: This is an experience some newbie car dealers may want to forget about. There is nothing like the experience the newbie dealer will gain by going to the “Unofficial Car Dealer School – The Dealer Auction.” Here they will learn all about bidding against the coke machine. Among other things that are unofficial trade secrets of the used car business.
Newbie car dealers also learn the hard way about buying a set-up car at auction. They usually pay every nickel for that (set up to sell) unit. The next day the air is hot. A week later that nice shiny finish fades away to reveal the painted panels and other things that were not noticed when the car ran through the auction. It sits around for a couple of months and does not sell. The newbie dealer takes it back to the auction to try and dump it. Unfortunately, the regular sellers get good early run numbers. A newbie used car dealer ends up running at the end of the sale when most everyone has gone home. The only way to get rid of a turd like this is to put it on the Internet and hope someone from another state buys it sight unseen without an inspection!
Rebuilt and Salvage Title Vehicles: Most car buyers have no idea what the word “Rebuilt Title” or “Salvage Title” means. When a car is severely damaged by an “Accident, Flood, Fire, or other damage which exceeds 2/3 of its book value an insurer may declare it a total loss. Soon afterward a total loss vehicle’s title is canceled by its issuing state.
Someone buys that total loss vehicle at auction or elsewhere. At that time the vehicle could be used for parts. Or its prior damage is repaired to become street-legal again. Most states require that repaired vehicles be inspected by the State Division Of Motor Vehicles (DMV.) When the car passes inspection it is issued a Rebuilt Title. Different states have similar wording for the rebuilt titles, we are using the state of Florida as our example.
Certificate Of Destruction means just what it says. Vehicles with a certificate of destruction labeling can never be issued a rebuilt title. Certificate of destruction vehicles may only be used for parts. This kind of vehicle will never be street-legal again, though another state may issue a title for it.
Rebuilt title used cars should be bought for around 30% of book value. Vehicles with rebuilt titles also may not be insurable. If considering purchasing a rebuilt title automobile contact your insurance company.
Rebuilt title older automobiles can be reliable cheap transportation. As an example. An older vehicle is involved in a minor front-end collision that deploys its airbags (SRS) and is declared a total loss. Acquiring used airbags, control modules,s, etc from a salvage yard and repairing them would make a good daily driver if it’s bought cheap enough. Inspect rebuilt title vehicles yourself or hire someone that can before purchasing.
Factory warranty remaining vehicles: Lots of late-model used cars have an advertised “Factory Warranty” Or the balance of a factory warranty remaining. It is advisable to check to be sure that the advertised warranty is correct yourself. Don’t just assume the seller is telling the truth. Get the vehicle’s Identification Number (VIN) and call your local dealer and inquire about what warranty is remaining on that vehicle. Many situations will void a factory warranty. Accidents, Modifications, Abuse, Commercial Usage, Etc. Remember it’s your obligation to verify every detail about a vehicle you are interested in purchasing.
TIP: Once again Trust Nobody! Can you imagine being stuck making payments for several years on some falsely advertised late-model used car? The more money you are investing the greater the chance of getting taken advantage of by a bad seller in another state or country. Do your homework folks!
Vehicle History Reports: A CarFax report can be worth its weight in gold if you find out that the car you are planning on buying has undisclosed problems. Major accidents or salvage history, flood damage, odometer discrepancy, etc.
CarFax is without a doubt the leading authority in vehicle history reports. Vehicle history reports are only available for 1981 and newer passenger vehicles with the standard 17 Character VIN Number.
CarFax often includes major service history on vehicles that others do not. So if your looking at a car online and have serious thoughts about buying it. Be wise buyers and purchase a CarFax report on it. Remember these history reports are only displaying the data their companies purchase. They should only be considered a GUIDE to a motor vehicle’s history.
Another Good Vehicle VIN Check is the National Insurance Crime Bureau (NICB). This database is FREE and a must-check to look up insurance payoffs or other major vehicle damage .
style=”font-weight: normal;”>Doc once read a forum discussion where a buyer had won an auction for a late model Mazda Rx8. Experian Auto Check didn’t show any discrepancies. Even the car’s Carfax report was clean. But the NICB Database showed a total loss. Further investigation revealed that the owner of the car was paid an insurance settlement and kept the car so that settlement was never reported to the history report companies.
The private seller was deceitful and the buyer walked away. Once again it was a “Bargain Buggy” that turned out to be not such a bargain after all. This buyer was SMART and did his homework before paying for the car.
The old saying is often true. You get what you pay for! If you are looking into buying a used car in another state. Chances are it’s the low price that got your attention. Especially on auctions where the bidding can be at half of the book value or less in the beginning.
Buying older vehicles: Doc’s example of older means the used car is usually 8-10 years old or older. And has an odometer reading of well over 100k miles. Don’t expect a perfect showroom condition car regardless of what the advertisement claims. An old car can run perfectly today and puke an engine or transmission the next day. It’s just the nature of old used cars.
While technology has improved the modern automobile. All this high-tech stuff is very expensive to fix when the vehicle gets old or out of factory warranty. An engine or a transmission can easily exceed the value of an older vehicle.
Some sellers advertise vehicles as being perfect but are far from it. The seller is banking on someone far away who will buy the car and have it shipped home without an inspection. Don’t get taken by a sleazy seller and buy without an inspection!
Don’t fall for a car that has been “set up for photos.” The car might look good online but has hidden mechanical problems. This includes undisclosed frame damage or undercarriage rust. And many other undisclosed problems.
Certain cars when they get old have their own faults and failures. For instance, older Cadillacs with the early NorthStar V8 are prone to head gasket failures. Repairs such as this example can exceed the value of the car. It’s the buyer’s responsibility to either check the vehicle out in person. Or if that’s not possible have an inspection company check it out. There are many Mobile Inspection Services that will inspect a car in another state. If you buy a car sight unseen and it’s not as described you will be stuck like Chuck!
Odometer Tampering Fraud: This is another situation anyone buying a car should be aware of. The LAW says that a vehicle’s odometer will not be tampered with . It’s very clear on the subject of rolling back an odometer. Or replacing an odometer with another show lower mileage. This includes exempt-status vehicles. The law makes no exception to altering an exempt vehicle’s odometer. Any vehicle 10 years old or older is exempt from odometer recording.
If a vehicle’s odometer has been replaced or repaired it must be disclosed when the vehicle is sold. Franchised dealerships repair techs that replace an odometer as a rule put a notification sticker in a car’s door jamb showing the date and mileage (if known) that an odometer was replaced. New odometers from the dealer usually start off at 0 mileage (analog).
Shady-used car dealers and scamming private individuals may alter (rollback) an analog odometer to deceive a buyer. Often a CarFax Report will show a vehicle’s mileage history. It’s a good investment to purchase a CarFax Report on any vehicle 1981 or newer to check the mileage readings. Also state DMV records, inspection stations, etc, record a vehicle’s mileage in the state database. If you suspect a vehicle you are considering buying is displaying the wrong mileage. Check the registered state DMV to see what their recorded mileage is on that vehicle. That information should be a public record, but you might have to pay them to get a printout.
A vehicle may have been into a franchised dealer for warranty service. Calling any franchised dealer and giving the service manager the last 8 of the VIN could reveal any odometer discrepancies. It’s also advisable to do a visual inspection. Check for wear on the brake pedal. Steering wheel. Check how easily the driver’s door opens and closes. Look for any visible signs that the mileage might be higher than the vehicle odometer is showing. Also, there is software on the market that will alter a digital odometer’s mileage reading. So if the odometer is digital, don’t rely on it being accurate. Do your homework and investigate for possible odometer fraud. It’s better to find out before purchasing a car that has been clocked than after the fact.
Odometer Exempt Vehicles: Any vehicle that is 10 years old or older is considered Exempt on Odometer Recording by Federal Law. Most dealer auctions will sell these age vehicles as “Odometer Exempt”. Chances are if a title transfer was done on an older car it will probably say Exempt on the title where the mileage would normally appear. Once a vehicle has been exempted it will stay that way.
An exempt qualifying older vehicle may possibly be registered as “Actual Miles” in most states as long as its supporting title and odometer reading/statement reflect this actual mile. Buying a 10-year plus automobile with an actual mile title? Get an actual miles odometer statement from the seller. Odometer statements can be downloaded on the net .
Old 5 Digit Odometers. Doc has seen many older cars with 5-digit analog odometers for sale. The car seller is advertising the car as actual mileage. This is mostly observed on old collector cars from the ’50s 60’s ’70s. The odometer (clock) has probably rolled over at least twice. In older cars, the condition of the vehicle is more important than low mileage.
There are no history reports on any car older than 1981 when the current 17 characters VIN became standard. So the only sure way to document the mileage on a collector or antique car is with service receipts. An old logbook that reflects dates and mileage readings of service work and oil changes etc. A logbook would have to look old to convince me it is legit. Don’t fall for a printed-out document with dates and mileage.
If you buy an older car and the title states “Actual Mileage” be sure to get the seller to sign an odometer statement that the mileage IS ACTUAL. When registering the vehicle be sure to request the DMV record the mileage as actual. You have to request this as they will record it Exempt if you don’t request it! This is really important to keep the market value of an older car with actual miles. Transferring the title to Except might affect the car’s market value!
Vehicle Sales Taxes Effecting Out Of State Car Sales: Most states are reciprocal as far as collecting their taxes goes. It’s best to check with the dealer you are buying from about any tax liability. It is also recommended to call your state’s DMV to find out if any taxes are due when you register the vehicle. Every state is different. Also, be advised not all dealers follow the law and collect the proper taxes. If the dealer does not collect tax, you can usually pay it at your DMV when transferring the title. Be prepared to produce a Bill Of Sale to prove what you paid for the vehicle.
Making Safe Vehicle Payment: If you have done your homework and are ready to purchase your internet car use a safe payment method. NEVER use Western Union or any other Cash Transfer Service. Beware of Fake Escrow Services that will steal your money! WU is the Scammer’s Choice for receiving payments because a payment can be picked up in any country. All the fraudster needs is the money transfer number.
Beware of sellers who request payment by gift or prepaid debit cards. This type of fraud often uses PayPal and Amazon gift cards. The fraudster will request the card’s redemption codes by email. Beware of smartphone apps such as OfferUp and Letgo that are being used to defraud buyers and sellers.
Doc’s payment choice for doing an internet vehicle transaction online would be to send it by a bank wire transfer. If buying from a licensed dealer the dealer could provide you with the company’s bank wire transfer instructions via email or by fax. This is especially good if you will be getting the vehicle shipped home and want to be sure the dealer receives your payment. Another option is to pay by a Cashiers’s Check and mail it using USPS Priority or Express Mail with Signature Confirmation. This is important so you know they signed for it.
When Doc was selling cars on the Internet he would send the title and paperwork requiring a signature. Good insurance for making sure the title didn’t get lost in the mail. If a cashier’s check is lost in the mail, the issuing bank most likely would require you to put up a bond before replacing it. Don’t take the risk of getting stuck like Chuck because you were too cheap to properly mail the check!!
If you are picking the vehicle up in person paying cash on delivery is OK too. I would be sure the seller had the title and would be handing it over to the buyer on delivery. Be sure to have followed my advice earlier in this article and did your title ownership homework. Along with any vehicle inspection etc. There’s nothing worse than flying long distances with a ONE-WAY TICKET and finding out the vehicle was a POS because you didn’t have it inspected.
Don’t be a victim of Internet phishing scams!
If a vehicle’s price seems “unrealistically low” STOP and asks yourself. Is this a scam listing? What’s wrong with this car? Has it been in an accident? Was this car in a flood? Does this car have a rebuilt or salvage title? Don’t be defrauded!
Sellers Agent Vehicle Brand Fraud got its start on eBay Motors well over a decade ago. We honestly believe eBay could have put a stop to fraud by educating their community. But obviously, corporate profits were more important than their member’s security. Many fell victim to car scams on fraudulent listings, while eBay either claimed fraud was minuscule or denied its existence.
eBay Vehicle Purchase Protection (VPP) Brand Fraud was claiming so many victims in 2011, that the FBI launched an investigation into brand fraud.
The Federal Bureau Of Investigation (FBI) filed this report on August 15, 2011, advising consumers not to fall for vehicle scam advertisements.
Many fraudulent advertisements are found on Autotrader.com, Cars.com, Craigslist, eBay Motors, and many other online publications and smartphone apps.
Fraudsters are also advertising in conventional print publications like newspapers and magazines. Don’t lose your money to internet fraud!
Those ads you see are phishing sucker bait! And are intended to lure a prospective buyer to email the fraudster. The fraudster is most likely in Europe or another country operating out of an internet cafe or wireless broadband connection.
Internet fraudsters are pros at what they do! Steal money from gullible people thinking such an unrealistically low price is legit! Don’t Be a Victim of Internet Fraud!
Scammers are using Amazon’s Brand Name to defraud consumers. This counterfeit Amazon.com website is registered in Beijing China. It’s used as part of a confidence scam setting up non-existent used car shipping. Don’t be a schmuck and lose your money to brand fraud!
Folks if you are online used car shopping and plan to meet someone to buy a car (or another item.) It’s best to meet in a public place during daylight hours only. A busy mall parking lot, a local police station parking lot , etc.
These retirees were murdered and robbed when meeting a stranger to purchase a 1966 Mustang. Criminals answering ads on local smartphone apps such as OfferUp and Letgo. Then make arrangements to meet and do business, but instead, sellers are killed and their merchandise was stolen.
If you fall for one of these used car phishing scams your money will be gone in the blink of an eye. Sorry to be blunt, but it’s like taking your money and throwing it in the trash!
Also, be aware of MONEY MULES that get suckered into taking payment for a VEHICLE as a SELLER AGENT. Fraudsters contact people searching for jobs online and offer them jobs as an agent. The scammer has his victim wire the money to the agent who takes 10-20% of the sale proceeds as their commission. The agent (money mule) then wires the balance to someone else.
Scammers will often “RINSE” their dirty money several times in an attempt to hide their tracks. If a person falls for a work-at-home scam they could wind up in prison for “money laundering or grand theft.” The so-called agent will be up the creek without a paddle when the feds come knocking! So if someone contacts you about working for them as a seller’s agent collecting payments RUN!
Also of major importance. If you have emailed a scammer, there is a good chance they could have slipped a key logger or some other virus onto your computer. Be sure to do a full virus scan of your computer or smartphone. Then go online and change any banking or other online account passwords. Internet scammers are pros at doing what they do best stealing sucker’s money!
If you need a good free antivirus program try Microsoft Security Essentials for Windows. It works excellently and auto-updates its definitions just like Norton or other paid software.
If you are selling your used car it’s best to put your terms of sale in your ad. Be sure to specify how you want to be paid. Cash on delivery is OK. If doing an internet transaction insist the buyer use a bank wire transfer to send your payment.
Also, it’s always best to tell prospective buyers in writing that your used car is sold AS-IS with no warranty. Doc used to say “if this car breaks in half you own both halves” which pretty much sums it up. Put this verbiage in writing. Even if your car has the balance of its factory warranty remaining, It should still be sold AS-IS but worded that it does have its remaining balance of factory warranty that follows the vehicle, not the owner. An example is here.
Here is a short audio snippet explaining why the used car AS-IS Sale is best!
NEVER Accept PayPal for a used car’s full purchase price. PayPal is good if you are looking for a quick way to collect a vehicle deposit. Doc suggests no more than $200-300. Be aware a credit card-funded chargeback could cost you that deposit money as a seller. Chargebacks are the number one reason not to accept full payment for an automobile by PayPal.
PayPal Buyer Protection does not cover “Vehicles or Vehicle Deposits.” Doc has read horror stories online where some PayPal customer support reps did not know Vehicle specific rules and let a buyer reverse a vehicle purchase. If you have sold your car truck boat or whatever is considered a vehicle you could wind up stuck like chuck.
Also, it is possible to charge back a credit card-funded used car purchase. However, a motor vehicle is considered titled property . Usually, credit card companies will not charge back on the titled property. BUT buyers have been known to lie to their credit card provider saying something other than a vehicle was purchased.
If PayPal gets a notification of a chargeback they take the money back from your account. If your account is empty they give you a minus balance and take anything that is received from that point on. PayPal will eventually turn the uncollected balance over to collections. And will surely file suit if the balance owed is large enough. If you have something to attach and good credit you will be stuck paying them. Here is a Good Example of why PayPal should not be accepted for a motor vehicle.