Beware The Perils Of Buying A Used Car From A Private Seller

By harley erbe

We hear from people who have bought a used car from a private seller and then discover that there's something wrong with the car.  They want to know whether they can sue the seller for money damages or return the car to the seller and demand their money back.  The answer's usually yes, they can try, but it may not be easy, as I discussed in an earlier blog post about vehicle fraud claims.  The best practice is to do everything possible to avoid the situation in the first place.

The first step is to avoid, if possible, buying a used car from a private seller.  By "private seller," I mean someone not affiliated with a vehicle dealership who is selling the car on their own.  You're much more likely to run into issues with a private sale instead of going through a dealership, particularly a major, longstanding dealership. 

Major dealership operations rely on their reputations to generate sales, referrals, and repeat business.  Therefore they're much less likely to knowingly sell bad vehicles without proper disclosures and much more likely to work with you to resolve the issues should any problems arise.  They also have permanent physical locations and are easy to contact and find if problems do occur or, worse yet, you need to pursue a legal claim.  Additionally, dealerships have the money to pay a judgment should you sue and receive one.

Conversely, many private sellers have none of those characteristics.  They don't care about sales or repeat customers because they're not in the business of selling vehicles.  If issues arise, they may have moved, even out of state, and are difficult to locate.  That can create difficulties with trying to resolve the issues or prosecute a legal claim.  And even if you successfully sue and receive a judgment against the seller, who's paying that judgment?  The seller may not have sufficient money or nonexempt assets to satisfy the judgment and nobody has insurance to cover this sort of situation.  

If you do decide to venture into the wild wild west of private vehicle sales, it's up to you to protect yourself and to remember that you're the one with the money and have the right to walk away before the deal's complete if you don't like what the seller's doing or refusing to do.  You can learn an awful lot for free or minimal expense before you commit yourself to buying the car.  Here are some things you can do:

  • Search the seller's name for free on Iowa Courts Online.  If you see criminal cases involving fraud, theft, dishonesty, etc. or civil claims involving such things against the seller or breach of contract or debt collection cases against the seller, you will probably want to find a different seller.  Seller's who are willing to knowingly sell you a bad vehicle and not tell you about any issues often have a criminal or civil case history of doing such things.
  • Get a Carfax report for the vehicle.
  • Make sure you get the seller's disclosure statement for the vehicle, which the seller's required to provide under Iowa law.
  • Pay a reputable mechanic to inspect the vehicle, including for undisclosed accident damage if possible, in addition to obtaining the Carfax history and seller's disclosure statement.  If the seller refuses to allow a vehicle inspection, take your business elsewhere because a seller with nothing to hide should have no problem if you want to pay a mechanic to conduct a pre-sale inspection.
  • Test drive the vehicle yourself and make sure everything's properly functioning.  See the previous bullet point if the seller refuses to allow a test drive.
  • If the seller does disclose any issues, assume that they might be worse than the seller claims.  Many private sellers will try to gain the buyer's trust by disclosing minor issues and downplaying them in the hope that the buyer will think the seller's being completely upfront and honest, when in fact the issues are greater and the seller's hoping that the buyer won't probe deeper when minor issues are disclosed.

One final point -- Consider recording your discussions with the seller about the vehicle.  You can legally do that openly or secretly under Iowa law.  If an issue ever arises over what the seller told you or didn't tell you during the sale, you'll want an audio recording to prove that the conversations occurred in the manner that you claim they occurred.  Without a recording, you could end up in the difficult situation of arguing your word against the seller's, which could go either way in a legal claim.

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