The most informative in depth article ever written about internet vehicle buying and selling. Published by a retired internet car dealer who knows this business well.
DON’T BUY OR SELL A CAR ONLINE UNTIL YOU HAVE READ THIS PAGE!
Chances are you found this article on the net looking for advice how to buy a used car on the Internet without getting a raw deal.
I am a previous licensed Florida used car dealer with over 40 years in the business. 10 plus of those years was selling used cars online and exporting cars worldwide.
I have since retired from the used car business, but are happy to assist you get a great deal on your next automobile!
Updated information on Avoiding Internet Car Scams 2016 is HERE.
There are indeed some real good deals on the Internet. Unfortunately that good deal is usually several states away. And like it usually is – if that price seems really low chances are there is a good reason for it. Don’t get taken advantage of!
Update 05/11/2015: Fraud Alert! NICB Exposes Major Craigslist Car Buying Forged Cashier’s Check Scam! Car sellers are accepting genuine looking cashiers checks for their car that sold on Craigslist. A week later when the check bounces the victim is out their car. See our article about this fraud here.
Update 01/28/2015: Due to the robbery and murder of a Georgia Couple. Elrey “Bud” Runion and his wife, June E. Runion. My sincerest condolences go out to the Runion’s family. May god bless you and your parents soles.
Folks if you are online car shopping and plan to meet someone to buy a car (or other item) it’s best to meet in a public place during daylight hours only. A busy mall parking lot, at a local police station parking lot, etc.
Back in the mid 90’s AOL was a BBS (Bulletin Board System) that offered Internet Access. And slowly more and more people were finding a use for those free floppy disks that were mass mailed to everyone, (other than re-formatting and using for other things). eBay was just getting started and was all about trust and community. Most of the the sellers were honest and contributed to the principles that the site was founded on. If a bad seller got into the circle of trust the company booted them real fast! You could buy a car several states away or in another country and be assured the vehicle was what it was represented to be. Internet car sales was born and it was great!
Lets go fast forward from those early days to today. Trust is nothing but a five letter word with little meaning. A smart buyer will do a lot of homework researching a vehicle he/she is interested in purchasing.
Have the vehicle inspected! The odds are if a vehicle is priced really cheap It could be a fraudulent advertisement out to steal your money, or is a major problem vehicle. Older northern vehicles with undisclosed frame rust, flood damaged vehicles, accident damaged vehicles with undisclosed salvage titles, just to name a few. Not counting curbstoners (unlicensed dealers) flipping cars with open titles, that might not be transferable into the new buyers name. Do your homework folks!
Buying a car from a private seller. Beware of private sellers that buy and sell vehicles with out being licensed. Flipping cars from one owner to another. The curbstoner buys a car from a little old lady in a newspaper. Instead of going to his local DMV and transferring that title into his name, he resells the car to Buyer B who prints his name in on the back of the title, but does not go to the DVM and pay the taxes and transfer it into his name. Instead he might have made a few repairs and clean it up, then decides to sell it. So 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 in above his name that he
just crossed out. Seller B then hands the title to Buyer C who takes it to his tag office to pay the Taxes and purchase a license plate. The title clerk takes one look at that crossed out name and rejects the title for transfer.
Now here is where the mess starts. Buyer C’s DMV tells him/her to contact the person who’s name is printed on the front of the title. Buyer A would be required to transfer this title into his/her name, pay any taxes due, yada, yada, yada, then sign the new title they receive over to Buyer B who would repeat this process and sign the title over to Buyer C. Only problem is.. the little old lady that sold the car has no idea who she sold the car to. Buyer A just paid her cash and had her sign off as the seller. By law this car is Legally Still Titled in Her Name. If it is used in a crime or involved in an accident, the police will be coming to her! It’s a real paperwork nightmare! Often it’s easier to get the registered owner to file for a duplicate title, and then sign it over to the person trying to title it in their name. Though a DMV official will not tell anyone this because it’s considered illegal. Any way you look at it, it’s an absolute nightmare getting a non-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. Licensed dealers excluded. To cover your butt. I advise anyone that’s buying a car long distance on the Internet from a private seller to request a fax, or scan and email attach “both sides of the title, along with a copy of the sellers photo ID or drivers license to prove the vehicle is titled in their name. This is the best proof of ownership a car buyer can get. If the car the individual is selling is not titled in his/her name, it’s not their car to sell period! If both the buyer and seller are in the same state, insist on going with the seller to the motor vehicle bureau (DMV) to do the title transfer. 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 the venue that their Vehicle Purchase Protection program (VPP) excludes buying a car and receiving a title, but not being able to transfer it (The Curbstoner Exclusion.) If you end up like this you will be stuck like Chuck, and the only solution would be to have the registered owner apply for a duplicate title and sign it over to you. Or file suit against the seller. Attorneys are not cheap, and even if you manage to get a judgment it may be impossible to collect it. And attorneys fees and court costs, 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 not running, or was a project someone started to restore but never completed, or for parts. Others are restored but never titled in the owners name either because the owner bought the car as an investment and didn’t want to pay the taxes and registration fees, or otherwise don’t drive it. It’s not uncommon to see a collector car go through a half dozen owners without a title transfer. The problem with this is, if that title is lost it can be a nightmare getting a duplicate issued.
Buying a car from a licensed dealer. While 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. It’s also very common to have wholesalers working off of a dealers license. The wholesaler usually pays a draft fee to use the dealers 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 dealers agent. Plus the dealer is ultimately responsible for his agent’s actions, so this kind of seller 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 trades to auction. This accomplishes two things. It keeps their used car managers from taking Grease (money under the table) and selling trades to their friends at a reduced price. It also ensures 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 swapping the units they can’t sell among each other.
The older cars are mostly sold on the “red light” AS-IS with No Warranty! The dealers sell them the same way they buy them, AS-IS! When the auctioneers gavel falls and he hollers SOLD someone is the proud owner of that unit with any and all faults it may have. If it don’t have a reverse that’s too bad. There is no crying to the office about it. Lots of these kind of vehicles end up for sale on the Internet! This is where an Inspection can be worth it’s weight in gold!
Becoming a new dealer is an experience some may want to forget all about. There is nothing like the experience a 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 car business.
Newbie car dealers also learn the hard way about buying a set up car. They usually pay every nickel for that (set up to sell) unit. 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. Newbie dealer takes it back to the auction to try and dump it but unfortunately the regular sellers get the good early run numbers, and newbie dealer ends up running at the end of the sale when most everyone has went 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!
Buying a late model car, truck, van, etc. Lots of late model cars have an advertised “Factory Warranty” Or the balance of a factory warranty remaining. But it is advisable to check to be sure it’s correct yourself. Don’t just assume the seller is telling the truth, get the vehicles VIN (ID Number) and call your local dealer and inquire what warranty is remaining on that vehicle. Lots of situations can 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 36 months or even longer on some falsely advertised late model vehicle? Didn’t think so! The more money you are investing, the greater chance is of getting taken by a bad seller in another state or country. Do your homework folks!
Vehicle History Reports. These can be worth their weight in gold if you find out that car you are planning on buying has Major Accident or Salvage History, Flood Damage, Odometer Discrepancy, Etc. CarFax is without a doubt the leading authority in vehicle history reports. Be advised that 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 and have serious thoughts about buying it, do yourself a favor spend the money and purchase a CarFax report on it! Remember these history reports are only displaying the data their companies purchase! They should only be considered as a GUIDE to a vehicles history!
Another Good Vehicle VIN Check is the National Insurance Crime Bureau (NICB). This database is FREE and a must check to see if an insurance payoff was ever made on a vehicle.
I recently read a discussion on an automotive forum where a buyer had won an auction for a late model Mazda Rx8. Auto Check didn’t show any discrepancies and even CarFax was clean. But the NICB Database showed a total loss in 01/2008! Further investigation revealed that the cars owner was paid an insurance settlement, so it never was reported to the history companies.
The private seller was deceitful and the buyer walked away. Once again it was a “Bargain Buggy” that turned out to not 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! Lets face it, if you are looking into buying at a car in another state, chances are it’s the price that got your attention. Especially on auctions where the bidding is at 1/2 of book value or less.
If your buying an older car. My example of older means the car is usually 8-10 years old or older, and with an odometer reading well over 100k miles. Don’t expect a perfect showroom condition car regardless what the advertisement claims. An old car can run perfect 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 real expensive to fix when the vehicle gets old. An engine or a transmission can easily exceed the value of a older vehicle. Some sellers advertise vehicles as being perfect but are blatant lies. The seller hopes someone far away will buy the car and have it shipped home!
Don’t fall for a car that has been “set up for photos” that might look good but has hidden mechanical problems or undisclosed undercarriage rust or other damages. Also beware that certain cars when they get old have their own faults and failures. For instance older Cadillac’s with the early NorthStar V8 are prone to head gasket failures which having to fix can exceed the value of the car. It’s the buyers 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 you are planning on buying. 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 thing anyone that’s buying a car should be aware of. The LAW says that a vehicles odometer will not be tampered with. It’s real clear on the subject of rolling back an odometer, replacing an odometer with another showing lower mileage, etc. This includes exempt status vehicles. The law makes no exception to altering an exempt (10 years old or older) vehicles odometer.
If a vehicles 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 cars door jamb showing the date and mileage (if known) that an odometer was replaced at. New odometers from the dealer usually start off at 0 mileage (analog).
Shady used car dealers and scamming private individuals may alter (roll back) an analog odometer to deceive a buyer. Often a CarFax Report will show a vehicles mileage history, but it has been my experience others may not. 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 vehicles mileage in the state database. If you suspect a vehicle you have bought may not be displaying the proper mileage check with the state DMV to see what their recorded mileage is on that vehicle. That information should be 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, how easily the drivers door opens and closes, any visible signs that the mileage might be higher than the vehicle odometer is showing. There is also software on the market that will alter a digital odometers mileage reading. So if the odometer is a digital one, 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 Disclosure 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 older vehicle may still be registered as “Actual Miles” in most states as long as it’s supporting title and odometer reading/statement reflect this actual miles.
Old 5 Digit Odometers. I see so many older cars with 5 digit analog odometers where a seller is advertising the car as having the actual or correct mileage. This is mostly observed on old collector cars from the 50’s 60’s 70’s. The clock (odometer) has probably rolled over at least twice.
There are no history reports on any car older than 1981 when the current 17 character VIN became standard. So the best and probably only way to document the mileage on a collector or antique car is with service receipts. An old log book that reflects dates and mileage reading of service work and oil changes etc. A log book would have to look old to convince me it is legit. It’s too easy to use a computer to document dates and mileage and then print it out.
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 and 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 as Exempt if you don’t request it! This is real important to keep the market value up on an older car with actual miles. Transferring the title as Except will kill the cars market value!
Vehicle Sales Taxes and 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 states 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 Payment. If you have done your homework and are ready to purchase your internet car, use a safe payment method. 1st off NEVER Use Western Union or any other Cash Transfer Service. Beware of Fake Escrow Services that will steal your money! WU is the Scammers Choice for receiving payments because a payment can be picked up in any country, all the scammer needs is the MTU number!
My payment choice if i was doing an internet vehicle transaction 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 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 Check and mail it using USPS Priority or Express Mail with Signature Conformation. This is important so you know they signed for it.
When i was selling cars on the Internet i would send the title and paperwork this way to be sure it didn’t get lost in the mail. If a cashiers 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 you on delivery. Be sure to have followed my advise earlier in this article and did your title/ownership homework. Along with any vehicle inspection etc. Nothing worse than flying to a long way from home location with a ONE WAY TICKET and find out the vehicle was a POS because you didn’t have it inspected. Be a SMART EDUCATED BUYER!
The Internet IS INFESTED with Fraudsters who offer a vehicle for sale at an incredibly low price. If a vehicles price seems “unrealistically low to you” STOP and ask yourself, what’s wrong with this car? Been wrecked? Been in a Flood? Salvage title? Is this a fraudulent listing?
Lots of times these fraudulent advertisements will be found on Autotrader.com, Cars.com, Craigslist, eBay Motors, and many other online publications and venues. Fraudsters are also advertising in conventional print publications like Newspapers and Magazines. Don’t Get Phished!
Fraudulent Invoice For Internet Vehicle Purchase. Watch this video as i show you how vehicle bank wire deposit phishing scams are operated in great detail. Don’t swallow the Sucker Bait!
Updated 06/07/2014: Fraudsters are now using Green Dot Moneypak to defraud car shoppers. See my article and video that was published today for further details.
Those ads you see are sucker bait! And are intended to lure a prospective buyer to email the scammer, who is most likely in Europe somewhere 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 Get Phished Out Of Your Money!
Fraudsters will offer to process the transaction through Amazon Payments, eBay Vehicle Purchase Protection Program, Google Checkout, and other venues. They claim that a 3rd party holds the money until the vehicle is received and approved by the buyer. The documents the seller will send look authentic but are fraudulent! eBay does not guarantee Craigslist or any other venues transactions. Here is the Authentic eBay Motors VPP Overview Page.
If you fall for one of these phishing scams your money will be gone! Sorry to be blunt, but it’s like taking your money and throwing it in the trash!
Just remember – there is NO FREE LUNCH! Someone somewhere is always paying for it! And there is no BARGAIN CAR coming to you with FREE SHIPPING Either!
Also be aware of MONEY MULES that get suckered into taking payment for a VEHICLE as a SELLERS AGENT. Scammers contact people searching for jobs online and offers them a job 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 on to someone else.
Scammers will “RINSE” their dirty money several times in an attempt to hide their tracks. If you fall for this one you could wind up in prison for “money laundering” and “grand theft” it’s your ass that will be up the creek when the feds come knocking! So if someone contacts you about working for them as a sellers 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 machine. Then go online and change any banking or other online accounts passwords. These scammers are pros at doing what they do best, steal suckers money!
If you need a good free antivirus program try Microsoft Security Essentials for Windows. It works excellent and auto updates it’s definitions just like Norton or other paid software.
Doc’s Best Advice For Internet Vehicle Sellers
If you are selling your 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 i would 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 car is sold AS-IS with no warranty. I used to say “if it breaks in half you own both halves” that pretty much sums it up. Even if your car has a the balance of it’s factory warranty remaining, It should still be sold AS-IS but worded that it does have it’s remaining balance of factory warranty that follows the vehicle.
NEVER Accept PayPal for a vehicle’s full purchase price. PayPal is good if you are looking for a quick way to collect a vehicle deposit. I suggest no more than $200-300. But beware a credit card funded chargeback could cost you that deposit money as a seller.
Even though PayPal Buyer Protection does not cover “Vehicles or Vehicle Deposits” I have read that some PayPal customer support reps do not know this, and will 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 if one was used to fund a vehicle purchase. However a vehicle is what is considered “Titled Property” and as a rule credit card companies will not charge back on titled property. BUT the buyer could tell a tall tale to his credit card provider and say he bought something other than a vehicle.
If PayPal gets 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 comes in from that point on. PayPal will eventually turn the uncollected balance over to collections. Or even 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 why not to Accept PayPal for a vehicle.