buying a used car for the first time with cash
March 7, 2010 10:56 AM   Subscribe

I'm in the market to buy my first car. I plan to spend about 15-17k, buy a used car, and pay entirely in cash. I'm planning to look at mostly private sellers, since they have the greatest benefit from doing a cash transaction, and are most likely to lower their price. Am I right?

So I am going to buy my first car! I inherited the last one I had for 8 years, so I'm completely new at this. I would like to buy a used car (and pay about 15-17k in cash - I don't want a car payment).

Financing isn't an issue (since I'm paying cash), and I'm not worrying about a trade-in either (i scrapped my old car earlier).

I live in Maryland and will likely be purchasing in the DC metro area (most likely Maryland, but maybe DC or Virginia)

So I'd like to buy a car from a private seller (or maaaybe a dealer). Could MeFi offer suggestions on the following?

1) What guides do you suggest (web or book) on how to do the transaction?
2) By going the private seller route, I should be able to get the most for my money, right? (especially since I'm paying cash) How much give over a dealer's price have you found that you've gotten?
3) What issues do I need to watch out with with a private seller?
4) What is the best way to do the exchange of funds? (a Bill of Sale, and payment by bank draft?)
5) What's the best way for inspecting and test-driving the car before you buy it?
6) Do you have any horror stories about buying used from a private seller than can help me be careful?

Sorry this question is so vague - I'm not sure how to ask the right questions yet.
posted by waylaid to Travel & Transportation (17 answers total) 10 users marked this as a favorite
In these kind of transactions, cash isn't some magical device that lowers prices. The few times I have sold a car, I expected cash. If someone had tried to set up seller financing, there would have been no sale. If the person had secured a loan to buy the car I was selling, their bank would have paid me cash.

If I were an auto dealer offering financing, and someone used me to secure an auto loan, I would have actually both been paid in cash by the bank, and probably made a few percentage points on the transaction.

The only time cash would be important is if I were offer to sell the car with financing that I was funding myself, or if the alternative was a credit card transaction, which would cost me a few points to run.
posted by 517 at 11:16 AM on March 7, 2010

If you're buying a car from a private seller, they don't care whether you already had the money, or you borrowed it from a bank. Either way, it's cash to them.

You may well be able to get a lower price from a private seller - they are just trying to get rid of their car that they don't need or want anymore, not run a business. On the other hand, they won't provide as many services (financing, for instance), and you have less recourse if you are criminally defrauded.

These guys spend a lot of time pushing their own VIN check service, the value of which I have no idea, but there's a lot of other advice here. The "Do Not Buy That Used Car If" section seems like a good place to start.

They advise a bank draft, instead of literal cash. They have a bill of sale and some other stuff free though. Their site sure looks ugly though.
posted by aubilenon at 11:25 AM on March 7, 2010 [1 favorite]

My advice is to make sure you have a mechanic look over the car first. I bought my first non-inherited car from a private seller in September. I talked the price down by $1000 because of routine maintenance I knew the vehicle needed based on my own walk-around. Even then, I ended up spending about $500 more than I'd planned on maintenance because of a couple of things I missed that a real mechanic would probably have caught.

Agree that cash won't really get you anything special in terms of cost-reduction, though. If you can't hand them cash up front (whether you have it in-hand already or borrow it from the bank first), most sellers won't even bother talking with you.
posted by Alterscape at 11:47 AM on March 7, 2010

Carmax or certified used from a dealer.
posted by sageleaf at 11:47 AM on March 7, 2010 [1 favorite]

I did this two years ago, with about the same amount of money you have. I got a 2005 Honda CR-V (that's just a data point — it was my second one and I love it. the only reason I sold the first was to move overseas).

Anyway, if you do go the dealer route, be prepared — they will offer you financing and loans out the wazoo. It's in their best interest because in the long run they get more money from you (interest rates). Do not give in to this "upselling." They will be very, very persistent.

Cash is not the bargaining chip you think it is, but that shouldn't matter because you only have yourself to look out for, and not having a car payment is all kinds of awesome, as you well know.

I got a few extras with my car (an offroader's package, a roof rack) but I still paid exactly what I wanted to with the cash I had available.

Good luck!
posted by Brittanie at 12:03 PM on March 7, 2010

I'll second the website. The design is 90's terrible, and the tone is a little over the top, but it does have a lot of information and links to check out.

I think you probably can find a good deal from a private seller, but I think it's probably also worth checking out brokers in your area or a dealer like CarMax. My brother (in Baltimore) has gotten 2 or 3 used cars over the years from CarMax and seems pretty happy with them (the cars and the dealer.)
posted by sevenless at 12:06 PM on March 7, 2010

Best answer: Here are some thoughts on Private vs. Dealer purchase. You are likely to get a better deal on the outright cost of the car if you by from a private party. You will, however, assume all liability for the condition of the car, its title, etc., if you buy private party. (While this is not strictly true, you will spend many hours and dollars pursuing a private seller in court, making you the one who has to prove all of the he said/she said issues.) When you buy from a dealer, you are paying them a profit. You are also paying them to be in business next week when you finally hear that squeak or you discover that there is a leaky puddle all over your driveway. You are also paying for their services in registering the car for you, making sure the proper use taxes are paid, etc. It is up to you to decide what these additional services and protections are worth.

As has been stated above, cash is not king any more. Private parties expect it and dealers loath it. I would not say anything about cash until the very end of the deal. If you are buying from a dealer, have them write up the deal as if they were providing financing and they have given you "their absolutely best price" and then ask if this the price they will charge if you pay cash. If the price changes, walk away. If you are buying from a private party, check whether there is an outstanding loan on the vehicle. If the seller says there is, arrange to meet at the lender's office and get a complete release of title from the lender as well as the seller before cash passes hands. If the seller represents that there is no loan against the car, arrange to meet at your bank. Tell the seller that you don't carry that kind of cash around and that you expect him/her to meet you at your bank (so you can draw out the funds) with the car and the title. Ask a bank officer to verify that you are receiving what appears to be clear title in exchange for the money. They are used to doing this, as they do it for cars they loan money on as well.

When you go to look at a car, whether at a dealership or at a private party location, take someone with you who knows about cars. This is not your mechanic. This is someone who can ask the simple questions that you, in the heat of the moment forgot and can pull you away from the deal if it starts to go south. Also, do not buy the car the first time you look at it. Tell the seller that you only buy things this expensive after you have slept on it overnight. If they want to sell, they will want to sell to you tomorrow. Then go home and talk this vehicle over with the person who accompanied you. They will be more negative about the car than you. Listen. Then balance their input with your thoughts about deciding.

The first issue I would look for with a private seller is this: Ask to take the car to your mechanic. If the seller says "No" walk away. They are hiding something. Second, ask straight out if there are any mechanical problems or if the vehicle has been in an accident. You will probably not get the whole truth, but you can gauge the seller's honesty by the type of responses you get. Ask your friend to turn on the headlights, blinkers, wipers, step on the brakes, etc. While you are supposedly looking at these things, carefully sight down each side of the car for ripples or paint irregularities. Have your mechanic do the same thing as well as his thorough mechanical check. The things he finds are not necessarily reasons not to buy, but are factors to stir into what issues you want to take on and how those issues affect the value of the car to you.

Don't have a mechanic? Join the auto club and get a referral to an auto club approved mechanic. Cheap buyer's insurance and you get roadside service for a year!

There's a lot more, but this is enough for now. If you want more say so.
posted by Old Geezer at 12:09 PM on March 7, 2010 [8 favorites]

Get a CarFax report. Have the vehicle inspected by a trusted mechanic or a vehicle inspection company. Or go to CarMax, they do this for you.
posted by torquemaniac at 12:09 PM on March 7, 2010

You are correct. Focus on the attitude of the seller for indications of bluffing. Go with your instincts, mostly. Tell them you have cash at the bank, check to see if a notary is on staff to sign the title transfer and the bill of sale (a generic document which you can probably get at the bank, or print one from the internet). And check the VIN on the title and the car and be sure the car was in their name, not some turnaround sale. In my experience, used car dealer lots are filled with bad or shady merchandise and often shutter their doors holding people's titles.
posted by Brian B. at 12:20 PM on March 7, 2010

A family member bought an RX-7 used several years back. The guy was adamant about cash, which was annoying. I suppose it's an excellent way to avoid income tax on his part and sales tax on your part. It seems some jurisdictions require a proof that someone is paying sales tax, or they'll charge you for it at registration. In fact, you should probably investigate registration concerns independently of what kind of dealer to buy from; at least I seem to recall reading in my state that if you buy a car out of state and register it here, you could be liable for different kinds of fees.

I second the advice to get a mechanic to look at it, because we didn't and it turned out there was a nice hole chewed in the air filter by a rodent. It could have been far worse, I'm sure.

Between the hassle of shady private dealers and high stakes dealership negotiations, it might be worth it to visit a CarMax and see what their prices are on comparable vehicles. Why assume that private dealers are the best price when you can shop around in this economy?
posted by pwnguin at 12:26 PM on March 7, 2010

Response by poster: Awesome, this is a great so far. (Thanks so much - I'm starting from ground zero.

@oldgeezer - if you have more advice, keep it coming!
posted by waylaid at 12:46 PM on March 7, 2010

In the past year I've bought three used cars, two from private sellers and one from a dealer. It was quite a trial by fire, but I learned a lot.

1) Random googling brings lots of guides that roughly say the same stuff. I liked the latest issue of Consumer Reports Auto at a local library. There are a lot of tips on how to inspect the car as a nonexpert. There's not much you can glean from it without being a technician, and I highly recommend bringing a car person.

2), 3) etc. By going the private seller route, I should be able to get the most for my money, right? (especially since I'm paying cash) How much give over a dealer's price have you found that you've gotten? What issues do I need to watch out with with a private seller? What's the best way for inspecting and test-driving the car before you buy it?

You are getting the most bang for the buck IF you play it right. Buying from a private seller is much more of a gamble. Used cars from dealers are generally in like-new condition, but you pay a premium for that quality, and the showroom, and the salesmen and the other overhead. With a private seller, you're avoiding the middlemen. You should take it to a mechanic for an independent inspection; this should cost about $100 but can save you much more. I let go of this rule when I bought my most recent car, but only because the owner kept meticulous records (an engineer, thankfully) on everything and it was a single owner vehicle.

Haggling with a private seller

Ask for a price discount on anything you notice wrong with the car, but be mindful of the market. KBB price is less relevant if some other buyer is willing to pay over KBB for the car (especially common outside of large cities, where there isn't a very active used car private seller market). If you can't get an inspection, ask to bring the price down by $100. Minor body damage (nicks, small dents), another $100. Significant wear on the interior, another $100. You can nickel and dime your way to a good discount, but it all depends on the seller and how much interest he's had in the car. There's also the Craigslist way, "What's the lowest you'll go?" but that's 1) annoying and 2) won't get you his actual lower limit, and will probably steel his will to be a hard bargainer. Justifying your demands always works better.

6) I bought a $1,500 beater car that wouldn't start when I came over for a look. It was a rusty honda that had been through 14 Michigan winters, with body rust and a dead AC. Once, I got under it to tape the muffler back to the exhaust pipe (seriously). The entire underbody looked like it had been pulled up from the Titanic, just massive corrosion. The repairs just to get it running reasonably safely cost over two grand. The car was worth at most $2,500 in excellent condition, so those repairs really stung. It was totalled before I bought it, and I learned a painful lesson.
posted by mnemonic at 2:14 PM on March 7, 2010

When I sold my car a year ago, the buyer took it to a Merchant's Tire and got a "car physical" for ~$50. They did a fairly comprehensive inspection and gave him a printout with the results.
posted by djb at 2:48 PM on March 7, 2010

The first chapter of Scam Proof Your Life is about new and used car buying. The tips mostly apply to dealers, but some apply to private party purchases too. Oh hey, there's quite a bit of that chapter available at google books.

We looked at dealership used cars yesterday, having arranged over the phone to be met by the internet / fleet manager (instead of one of the random commissioned salespeople trolling the lot -- this is the Scam Proof book's Tip #1 for buying from large dealerships). The lack of pressure was amazing. After the test drives we said "We like to sleep on things before making decisions" and they said "OK!" Zero pressure.

You might want to spend some time in the used car threads in the Edmunds forums.

Used car checklist (thanks, whoever it was who posted this in one of the old car buying AskMes).
posted by cybercoitus interruptus at 2:56 PM on March 7, 2010 [2 favorites]

FWIW, right now is a great time to buy a used Toyota from a dealer. They're generally offering well under Blue Book to people who trade them in and selling them to Toyota for slightly more, who will presumably put them back on the market in a few months when the furor about the recall issue has died down.

The dealer I was speaking with mentioned several cars they hadn't sold back to Toyota because they thought the manufacturer's offer was insultingly low that have been sitting on the lot for a month now because nobody will even look at them. One of them was a year old Camry hybrid they were willing to let go for around $18,000.

It sucks for the people who traded them in and got far less than the cars were worth, but their loss is your gain.
posted by wierdo at 3:25 PM on March 7, 2010

O.K. A little more. When you have finished your walk-around and think you are interested in the car, get in and just sit there quietly. After a few moments look around. Is the interior in good condition? If it has power windows and locks, do they all work from the driver's seat? Can you easily adjust the mirrors (inside and out) so you can see behind and beside you? Remember, outside mirrors are part of the design motif and are an impediment to good mileage. Their utility seems to come third amongst many auto manufacturers. Are the radio and heater controls fully operational and conveniently located? There are certain years of Chevrolet that require a Phd to figure out the controls.

Now, and only now, you are ready to start the car. How does it sound? Is it inordinately loud? Is there a "funny" noise that is going to bother you? Put it into gear. If it is an automatic, does it clunk or lurch when going into gear? If it is a stick shift, does it go into any gear smoothly? Turn on the heater until it gets warm. Is it working properly? Now run the AC through its paces. Is it working properly? Fixing a faulty AC can cost big bucks.

Now drive it. Does it accelerate as well as you will want it to when getting onto the Interstate? If you take your hands off of the wheel, does it drive straight or drift? With your hands off of the wheel, does it come to a complete stop without shuddering or drifting to one side? Drive it and bring it to a full stop in every gear, including reverse. Still like it?

Now, if it is a private party deal, arrange for your mechanic to look it over.

If your mechanic likes it (or you are at a dealer you trust and didn't use a mechanic because they will give you a warranty that extends beyond the curb) this is the first time to talk about price. Of course, you are not willing to pay what they are asking. Don't be insulting or rude. I usually say something like, "I understand that you are asking "X" but I really think the best I can afford for this car is "Y." Don't quote the Blue Book or the "experts" you have consulted. Just point out that you are a willing buyer with this much money and you would like to make the deal. It is up to them whether they want to make the deal. This is not the only car out there and, if you need to take a little more time to find the right one, remember that you are planning to own it for five or more years. What's another week of looking?

Good luck.
posted by Old Geezer at 4:02 PM on March 7, 2010 [4 favorites]

I find Edmunds useful.

I also find useful shopping in a pair (at the dealer or with a private party). My husband likes cars. I do not care about cars as long as they run. When we've gone car shopping, they work my husband (most car dealers work the man), they get close to a deal, and then I basically say, "I'm bored and that costs too much." With the sale about to slip away, it's amazing how much the price comes down. (Of course, it helps that I AM bored and I ALWAYS think it costs too much.)

If you feel uncomfortable asking for more time to think when being pressured, you can always say, "I have to check with my spouse before spending this kind of money," (whether you have to or not and whether you have one or not!). Sometimes people who are uncomfortable resisting a hard sell feel better with a spouse as an excuse. Also useful: "I'm not sure s/he'll be comfortable with the price, s/he was thinking I should be looking at $14,000 rather than $15,500 ...."
posted by Eyebrows McGee at 4:09 PM on March 7, 2010

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