The Right Way to Pay a Private Seller for a Car

PrivateAuto Pay empowers instant, fee-free payments of any amount. It's like Venmo for large transactions.

Before PrivateAuto Pay, paying the seller was the most challenging part of buying a private-party used car. Every other form of payment has major drawbacks.


Incumbent payment options involve one or more of the following undesirables:

1. Risky
2. Untenable for large transactions (volume limits on transfers)
3. Inconvenient
4. Slow

Say goodbye to slow, inconvenient, and risky payments in private-party transactions. PrivateAuto Pay is fee-free, instantaneous, secure, and it works any time of day, any day of the year.

PrivateAuto is by far the best way to pay for a car, and it's also the safest and most convenient way to accept payment if you're a vehicle seller.

Before we get into how amazing it is, let’s look at why other payment methods are less than awesome.

Cash is King... or Is It?

Buying an automobile with cash upfront is a great idea, as you won't be paying all the interest associated with a car loan. Physical cash can be a bit sketchy, though, especially where large sums are involved. If you're a cash buyer, meetups with strangers can feel unsafe when thousands of dollars are involved. And how do you verify the legitimacy of the bills?

Here are some drawbacks to cash transactions:

Trust: do you really know the person you're dealing with? How do you know they’re not going to take your cash and run?
Counterfeit cash: while counterfeiting is rare, can you prove to the seller that the bills are genuine?
Counting bills: do you enjoy counting out stacks of bills under the watchful eye of a stranger?
Paperwork: do you know how to do the bill of sale and title transfer for your state? Will you have a record of the transaction in case the seller wants to contest it?

PrivateAuto Pay allows you to pay cash—digitally. Actual dollars from your account to the seller’s, instantly.

No security worries, no counterfeit concerns, no transfer fees, and no limitations on transaction size. Just a few taps and you can pay up to seven figures instantly and securely.

PrivateAuto Pay keeps what's best about cash and pairs it with 21st century convenience and security. Out with stacks of grubby bills, in with smooth digital payments.

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A Cashier's Check is No Guarantee

Many buyers prefer a cashier's check for payment when buying used cars. A cashier’s check seems more certain than a personal check for transferring funds. However, unless you’re standing in front of the issuing bank during business hours and they verify the funds, the seller—if they're smart—won't see it as foolproof. Criminals have forged counterfeit cashier's checks to con sellers.

To be absolutely sure your cashier’s check is valid, some sellers wait for it to clear their bank before releasing the title. This puts pressure on you to pay a large sum while trusting the seller to sign over the car later. It also means meeting twice, which is inconvenient.

PrivateAuto offers a different payment method that is safe, instantaneous, and guaranteed. With PrivateAuto Pay, funds instantly appear in the seller’s account, unlike a cashier’s check. The entire transaction can conclude when you meet for a test drive, since transfers are immediate.

While cashier's checks add security beyond personal checks, limitations remain. For convenience and instant, guaranteed payments, PrivateAuto Pay is the superior choice.

Peer-to-Peer Cash Sharing Apps

Peer-to-peer money sharing apps like Venmo and CashApp are handy for splitting bills and sending money to your friends and family. But when it comes to larger payments, like a car transaction, they fall short. With weekly sending limits of around $5,000, these apps won't work for buying a $20,000 vehicle—to say nothing of a $100,000 vehicle.

Peer-to-peer apps make sense for splitting dinner, but not for paying for a Jeep Wrangler.

PrivateAuto Pay offers a better solution. You can securely send and receive up to $1 million fee-free and instantaneously, 24/7/365. As convenient as Venmo, but for large purchases.

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Wire Transfers are Fairly Secure

For large transactions, many buyers opt to pay for a car by bank transfer. The advantage is that funds are guaranteed by the banks involved, making it a fairly safe payment option.

However, wire transfers have downsides. The seller must provide their banking details to the buyer, opening themselves to potential financial harm. Wire transfers are also not instant—they require coordination between the buyer, seller, and two banks. If done outside banking hours, transfers can take days to complete.

PrivateAuto Pay enables instant transfers between buyer and seller accounts, anytime, 24/7. No one needs to exchange banking information or rely on banks to be open.

So while bank wire transfers provide some security, they lack convenience and immediacy. For fast and seamless payments on par with cash, PrivateAuto Pay is the superior choice.

Introducing PrivateAuto Pay

PrivateAuto Pay is our native payment option that gives you escrow-like safeguards and ultimate convenience and security. Here's how it works:

Your PrivateAuto Pay account is actually a bank account that you own, accessed via your PrivateAuto profile.
Easily move money between your PrivateAuto Pay account and your external bank account via a balance transfer.
Send up to $1 million with no transaction fees.
Instant payments arrive any time of day, every day of the year.
No exchange of contact information or banking info.
Encrypted info protects your data from hackers.
Conclude the entire transaction when you meet the seller for a test drive.

You can even buy a car long-distance and forgo that costly and inconvenient escrow company.

We’ve now made PrivateAuto Pay available for sellers on other platforms such as Craigslist and eBay Motors. You can fast-track a transaction using our DealNow feature.

What is DealNow?

If you’ve already found a car that you want to buy—even if it’s not listed for sale on PrivateAuto—you can enjoy the power and convenience of PrivateAuto’s transactional infrastructure to get the deal done. Our DealNow fast-track solution allows you to skip the initial shopping and negotiation process and go straight to the transaction.

Whether your dream car is listed on Facebook Marketplace, is being sold by a friend of a friend, or is being auctioned on a site such as Bring a Trailer, you can invite the seller to DealNow and enjoy unparalleled security and convenience.

DealNow uses PrivateAuto Pay for payments and offers all the same conveniences, along with a fast-tracked dealflow.
Here's the DealNow transaction flow:


1. Invite the seller to DealNow via a custom link.
2. Enjoy identity verification, in-app messaging, and a test drive scheduling feature (none of which require you to exchange contact info).
3. Meet the seller and test drive and inspect the car.
4. You and the seller go together through a step-by-step transaction process in which you each confirm relevant details right in the PrivateAuto mobile app. From mileage to the VIN to the condition of the vehicle, we help you both prevent any errors.
5. You and the seller each electronically sign an official bill of sale. This is stored in your PrivateAuto account as a legal record you can refer to down the road.
6. We prompt you to initiate payment after the seller is legally bound to the transaction from e-signing the bill of sale.
7. The seller gets a notification of funds received.
8. The seller signs over the car title and hands over the keys.

DealNow is so smooth, so safe, and so fast that you’ll never want to sell a car without it. No matter where you find your buyer—from eBay motors to Autotrader to your neighbor next door—DealNow will help you get the deal done and get paid, fast.

What is the Best Way to Finance a Car?

PrivateAuto offers integrated auto financing. After a credit score check and approval, qualified buyers can have funds transferred into their PrivateAuto account via a balance transfer between financial institutions.

Once financing is secured, buyers can instantly send money from their PrivateAuto account to the seller after finding the right used car. There's no need to coordinate with lenders or manage loan paperwork.

Here are some key advantages:

Everything happens in the PrivateAuto app, from initial financing application to funding the vehicle and sending payment.
Fast approvals. Get approved in minutes without having to fill out extensive paperwork.
Funds deposited quickly. Once approved, you'll have financing deposited into your PrivateAuto account within days.
Instant transfers. Send funds instantly to the seller right from your PrivateAuto account.
One-stop-shop. Handle the entire process from search to purchase to financing conveniently on PrivateAuto.
Competitive rates. PrivateAuto offers financing from an FDIC partner, so you get competitive used auto loan rates.

Additional benefits include handling the entire used car search, auto loan, and purchase conveniently on the PrivateAuto platform. This streamlined process saves buyers time and headaches.

If you’re in the market, feel free to get started with car financing here!

Along with buying a house, getting a car is one of life's big financial decisions. We’re here to make it easier for you. No more going to an external bank for your personal loan and jumping through a ton of hoops. Experience the ease of getting financing for your next car through PrivateAuto!

How to Avoid Fraud When Buying a Car

Unfortunately, when purchasing a car privately, fraud is a concern. Criminals use a variety of methods, such as faked vehicle history, odometer tampering, or title scams.

PrivateAuto offers vehicle history reports with all premium listings, and also has identity verification. These measures cut down significantly on fraudsters—but it always pays to be vigilant.

Don't let a seller rush you into accepting a high price or paying without verifying the details and test driving. If a seller gives you a high-pressure "act now or lose out" ultimatum, it's best to walk away. If the car is priced fairly, there will be other listings available without undue seller pressure.

The key is taking your time—carefully inspecting the car, verifying the VIN, test driving carefully, and not paying until you're confident about going through with the transaction.

PrivateAuto helps by letting you schedule test drives securely and make payments only when terms are met. With a little patience, you can find the right car and avoid car-buying scams.

How to Transfer the Vehicle Title

When you meet the seller to do the deal, they will transfer the title to you. You’ll then need to complete the title transfer process at the DMV (or your state’s equivalent agency).

A bill of sale is required in some states, but it is a good idea to sign one regardless, as it gives you written evidence of the transaction and the agreed-upon sale amount in case there’s a dispute later on.

PrivateAuto automates the bill of sale by giving you an official bill of sale for your state. You and the seller sign it inside their PrivateAuto mobile app, and it stays there in your account for reference. If there’s ever a question of the sale’s legitimacy, you have this document to back you up.

To learn more, read our complete guide to the bill of sale and why it matters.

If you want to learn more about vehicle titles, check out our detailed car title guide.



When I Buy a Car From a Private Seller, Can I Drive it Home?

Most states require the seller to remove their license plates before turning the car over to you, so you’ll be driving without plates. You should check with your local DMV to see what they advise.

In general, here’s what to know about driving your new-to-you vehicle home after the purchase.

1. In most states, you can legally drive a newly purchased vehicle home without temporary tags or registration, provided you have a bill of sale and title transfer paperwork with you. However, be sure to check your state's DMV regulations before hitting the road.
2. Some states do give temporary registration tags that let you drive for a short period before receiving permanent plates in mail. For example, in California you can get a temporary operating permit to drive for 90 days after a private party purchase. Check with your local DMV on options.
3. If registering the car immediately, some DMV offices can provide same-day temporary permits after processing the title transfer paperwork.
4. If you already have auto insurance, contact your provider to add the new car to your policy before driving it. If not, you'll need to purchase a new policy. Insurance is required to drive legally.
5. Keep documentation like the bill of sale, title paperwork, and insurance card with you when first driving the car. Also be prepared to explain the situation if pulled over before receiving plates.

You might find our state-by-state guide to license plates a handy resource. It covers what happens with license plates when a used car is sold, and you can learn more about the requirements of your state.

What to Do After You Buy a Car from a Private Seller?

Buying a car from a private seller rather than a dealership requires a few extra steps to make sure you can legally drive and register the car. But it's so worth it because you save on the middleman markup and documentation fees associated with dealerships.

Key steps after buying a car privately are registering the vehicle, transferring the title, and getting new license plates issued in your name (unless you’re in California or Minnesota).

Here are some more details on handling those specific post-purchase tasks:

1. When you purchase the car, the seller should provide you with the signed title. Review it to make sure their name is listed and they signed it over to you.
2. Before driving off, contact your insurance company to add the car to your policy. You typically need valid insurance in your name to drive legally. Make sure you have proof of insurance.
3. Head to the DMV as soon as possible to transfer the title to your name and register the car. Bring the title, bill of sale, ID, and insurance documents. Pay any required sales taxes and registration fees.
4. The DMV will provide you with new registration documents and license plates for the car in your name. These are required to legally drive the car.
5. All states except California and Minnesota: remove the old license plates and put on the new ones. Destroy the old registration and replace it with the new one for your records.
6. Consider having the car inspected for safety and emissions testing if required in your state. The DMV can provide guidance.
7. Notify your insurance company that the car is now registered in your name. Provide them the new VIN, plates, and registration.

Buying a car is sort of like starting a relationship. You’ll be spending a lot of time together. Start things off right by handling all the details associated with buying a car from a private seller.

What Paperwork is Needed to Buy a Car from a Private Seller?

Check your specific state laws to ensure you get all mandatory paperwork when buying privately. This documentation is crucial to legalizing the ownership transfer.

Here are some documents that are typically needed:

Bill of sale
Vehicle title
Registration
Release of liability
Odometer statement
State ID
Inspection forms



What is the Best Place to Buy a Car from a Private Seller?

PrivateAuto is the world’s only transactional automotive marketplace that provides the infrastructure and tools to transact securely. Other so-called “marketplaces” are actually just “meetingplaces”; they connect a buyer and a seller, but don’t support the transaction.

PrivateAuto is far and above the best car-buying app, but what if you don’t find the car you want? Maybe your perfect vehicle is listed on Craigslist, Facebook Marketplace, or CarGurus.

No problem. Find a car on another platform, then hop over to PrivateAuto to conclude the deal securely and quickly. Our DealNow fast-track solution gives you PrivateAuto's seamless transaction support. Built-in tools like verified identities, legally binding documents, and lightning fast payments up to $1 million.

So if your dream car pops up somewhere else, no problem! Use DealNow to wrap up the deal conveniently and safely. PrivateAuto's first-of-its-kind transactional tools enable smooth purchases regardless of where you discover the ideal set of wheels.

What are the Tax Implications When Buying a Car in Cash?

Unless you live in a state without it, you’ll need to pay sales tax on your vehicle purchase. Other than that, there aren’t a lot of tax implications when buying a car—whether you pay cash or choose to finance it.

Here’s what you need to know about tax implications for vehicle purchases in a general sense. Always do your research on your state’s requirements, as they may vary.

No income tax. A private party car purchase is not taxable income, so no income taxes are owed.
No gift taxes. Even gifting the car to someone later does not generally incur gift taxes unless it's a very expensive luxury vehicle. Individual state rules may differ
Sales tax. You will owe applicable state sales tax on the purchase price. The rate varies by state but averages 4% to 7% of the car's value.
Private sellers may not collect tax. Unlike dealers, private sellers generally don't collect sales tax. You will need to formally self-report and pay sales tax to your local DMV when you register the car.
Sales tax exemptions: research what exemptions are available in your state. Some states waive tax if a transaction is between immediate family members, or if the registrant is a religious organization, government body, or some other exempt status.

Buy a Car Through PrivateAuto

PrivateAuto is the best place to buy a used vehicle. Here's the PrivateAuto car-buying process:

1. Browse used cars for sale on PrivateAuto.
2. Make offers on cars you like (PrivateAuto is one of the only platforms that allows you to offer what you're willing to pay).
3. Message the owner and schedule a test drive without every giving out your contact info.
4. Meet up, inspect the car, and sign documents with the owner (done electronically in our mobile app).
5. Send funds instantly.
6. Drive away with your new-to-you car.
7. Complete the title transfer and registration at your local DMV.

Looking to sell your car? Create a listing on PrivateAuto and connect with interested buyers today!


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FAQ on Money Transfers


Does PrivateAuto offer payment plans?

PrivateAuto is a transactional marketplace that connects you directly with private sellers. You do not pay us for your car; you pay the seller. We do offer in-app financing options via a third party lending partner. You can apply for financing within our app. If approved, the lender pays the seller in full while you make your monthly car payment to the party lender according to the terms of the loan.

How does PrivateAuto vet buyers and sellers?


Does PrivateAuto provide the necessary paperwork for a successful transfer of ownership?


What is the safest way to transfer money when buying a vehicle privately?


Do I need an escrow service when buying a car privately?


How secure is PrivateAuto Pay?


Why are private vehicle sales better?