Don’t Forget These Tips on Scams if You Plan to Sell Your Car Yourself

Two hands reach for a car wrapped in a bow.
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Buying a car is sometimes a grueling experience. First, you’ll need to track down the right vehicle and negotiate a price with the seller. At the same time, you’ll have an existing vehicle to get rid of, and you’ll likely want to make some money on the sale. On top of all that, you may run into car buying scams.

The easiest way to offload a used vehicle is to trade it in when you buy a new one. But a dealer will only offer slightly above the actual cash value of the car. After all, the dealer needs to make money on the sale, too. Selling your vehicle to a private buyer is the best way to maximize profits, but it comes with a few risks. Car buying scams won’t just hit your wallet. They may also put your personal safety at risk.

Fortunately, there are a few things you can do to keep yourself safe when privately selling your vehicle. We have the lowdown.

Common Car Buying Scams

Used car scams often target the buyer, not the seller. But that doesn’t mean you can’t encounter scams when you’re selling your vehicle. Here are some of the most common car sale scams that could hit you as a seller.

  • Fake escrow: Car escrow services can help safeguard money as it transfers from a car buyer to a seller. But a common scam has buyers using a fake escrow service to give the appearance of funds being transferred. The scammer takes your title, as well as the car, and runs.
  • Identity theft: This scam has buyers faking interest in your car solely to gather information like your Social Security number and contact information. The buyer may ask to see certain records solely to get a copy of your information.
  • Payment plan: In this scenario, the scammer takes advantage of your good nature by convincing you to accept payment in installments. The scammer may even make a payment or two before disappearing.
  • Checks: Someone can fake both personal and cashier checks. By the time you realize the funds didn’t clear, your car is long gone.

These are only a few of the most recent scams. New ones can appear overnight. Below are some tips to help you avoid car buying scams.

5 Tips to Avoid Car Buying Scams

While it does come with risks, selling a vehicle yourself can be worth it. As long as you’re aware of used car fraud and take measures to protect yourself, you can make the most of the benefits.

Mark Beneke, owner of Westland Auto, Inc., regularly works with car buyers and knows the ins and outs. He has some tips for keeping yourself safe during a private vehicle sale.

1. Meet in Public

Your personal safety is top priority. Beneke stresses the importance of not providing your home address to potential buyers. Instead, choose a more neutral location to meet so the buyer can take a look at your car. He recommends meeting in a public space with low to medium foot traffic.

“Optional: you could carry pepper spray, tasers or any form of self-defense,” Beneke said. “This would be more for peace of mind.”

2. Run a Background Check

Instead of showing up to meet a stranger, Beneke suggests gathering information before agreeing to meet. You can request the following information and verify as much as possible before showing up for the appointment.

  • Driver’s license
  • Proof of auto insurance
  • Phone number
  • Email address

3. Set Time Limits

“Never leave it up to potential buyers to set a time to inspect the vehicle,” Beneke said. “Set time windows for when you’re available and let them work around them.”

When the buyer arrives at your designated meeting time, Beneke recommends mentioning the limited timeframe. You should also let the buyer know you have someone waiting for you. Better yet, have someone show up for the appointment with you. There’s safety in numbers.

“Do not let the buyer go on a test drive alone,” Beneke said.

Also, avoid hopping in the car with a buyer you haven’t pre-screened. If possible, take a friend along with you. Pay close attention to any red flags. If you sense something might be off, end the sale immediately. As always, stick to public areas, starting and ending the test drive in a public place.

4. Cash is King

Scammers often hone in on the funds transfer process. Almost every payment method is prone to scams, so it’s important to have a plan in place to verify the funds before releasing the vehicle and title to the buyer.

“Get the money first before you ever give anything,” Beneke said. “Do not do bank transfers/wires, checks, cashier’s checks or any of that.”

Even cash can be counterfeited. To protect against that, Beneke recommends getting a counterfeit bill detector pen. These pens use iodine to detect starch in bills. Because legitimate currency has no starch, the pen won’t leave a mark unless the bill is counterfeit. But these pens aren’t foolproof, so the Federal Reserve recommends looking for the watermark and security thread embedded in every legitimate bill.

5. Get Your Paperwork in Order

A contract is essential to protecting yourself as a seller. As Beneke points out, you don’t need an attorney to draft one. You can find templates online that will get the job done. Your contract should include:

  • The full names and contact information of both parties
  • The full vehicle details
  • The monetary amount being exchanged
  • How the funds will be paid
  • Any guarantees being made
  • The responsibilities of each party post-sale

If no guarantees are being made, specify that in the contract as well. Make sure both parties sign the contract and provide a copy to the buyer.

Beneke points out that each state has its own requirements for transferring the title. Most states require that you, the seller, sign the section of the document stating you’re releasing the title. In some states, you’ll need to sign the title over in front of a notary.

“Research your state-specific documentation requirements and make sure you follow their process to the T so that you release yourself from liability the moment you transfer ownership of the vehicle,” Beneke said.

Car buying scams are an ongoing issue, but that shouldn’t stop you from maximizing your profit from the sale of your vehicle. By taking some precautions, you can privately sell your car while avoiding car purchasing scams.

Stephanie Faris is a professional finance writer with more than a decade of experience. Her work has been featured on a variety of top finance sites, including Money Under 30, GoBankingRates, Retirable, Sapling and Sifter.