It is often said that you should never do business with friends or family. But does this apply to the purchase of your friend’s car? Let’s talk about it.
Buy your friend’s vehicle
When you buy a vehicle from someone who is not a dealer, it is called a private sale. This means that both the buyer (you) and the seller (your friend) have to handle all the documents and legal documents required to transfer ownership of a car. You and your friend must complete a bill of sale, sign the title, and go to the Department of Motor Vehicles (DMV) or Secretary of State (SOS) to transfer ownership to you. You must also purchase auto insurance.
Despite having to do all the paperwork, private sales are quite common. There are whole magazines and websites dedicated to people selling their own used cars, and some people prefer this method because they can set their own prices and terms. So, if your friend is selling their own vehicle, is it a good idea to buy them for them?
When you buy an expensive item from a close friend or family member, there is a chance that something could go wrong. Buying a car from a friend comes with some risk, but it could be a good deal for you. Of course, there is also a risk of getting a bad vehicle from a dealership.
Benefits of buying a car from a friend
- Could get a good deal. When you negotiate with a friend, you can get “friend prices”. A friend may be willing to get you a better deal because of your relationship. However, this is not always the case as they may have to hit a certain price to pay off a car loan, but they don’t have quotas to meet like a dealership. You may also feel more comfortable negotiating with your friend, since you are not at a dealership – some of that intimidation or pressure can be alleviated.
- No need to speak to a dealer. Unless your friend is a car dealership (it could happen!), You don’t need to talk about it at all during the transaction. Some buyers don’t like the pressure of shopping at a dealership, so it could be a big plus depending on who you are as a buyer, and it could be a more relaxed shopping experience.
- If something is wrong, you can probably find them. When buying a vehicle, there is always a risk that something will go wrong, no matter which road you take. However, with a dealership you may need to go through some paperwork if something goes wrong. With a friend, you probably have more direct contact with them, so it might be easier to resolve any potential issues that might arise.
Disadvantages of buying a car from a friend
- The sale could damage the relationship. If the car you’re buying for your friend is a lemon, or has repeated problems, then that could turn the whole deal into a mess. This is the reason why many people walk away from important transactions with friends and family, as money issues can quickly spoil relationships.
- What if you don’t want the vehicle? Suppose you take a look at the car and for some reason you don’t want to make the purchase. This might upset your friend, possibly offend him, and may make you feel pressured to close the sale even if you are not entirely comfortable with it. Never buy a vehicle if you’re not 100% sure it’s what you want, but choosing not to buy a friend’s car could hurt you. Approach the sale with caution and be clear with them every step of the way.
- It is likely that no inspection will be carried out. When you buy a vehicle from a dealership, it is usually inspected and examined for any possible issues. If anything is found, it is usually corrected or noted during the transaction, and it could mean a lower selling price. However, unless your friend is a car mechanic (which could be the case too!), Then he might sell you a car with issues that he is not even aware of! Before buying a vehicle from a private individual, have it inspected by a certified mechanic.
- As is and without warranty. When you buy a car from the curb or from a friend, there is usually no warranty. Most of the time, the vehicle is sold “as is”, which means that any problems that arise after the sale is your problem. While your friend may be willing to help if a problem arises, they technically won’t be obligated to do so unless something is written in a contract. Discuss these kinds of issues with them before going ahead with the sale.
Also consider your credit situation
Unless you have the cash to buy your friend’s car, then you need to get auto financing from a lender. To get a loan for a peer-to-peer sale, you need to find a direct lender from a bank, credit union, or online lender.
Direct auto loans can be difficult to obtain, especially if you have credit problems. With a lower credit score, it could mean a denial of financing or a higher interest rate than you would like.
If you cannot get an auto loan approval from a direct lender, you may need to look into third party financing through a dealership that has signed up with bad credit auto lenders. Dealers with bad credit options are called Special Finance Dealers, and they don’t give auto loans to individuals – they only finance vehicles on their own land.
If you have bad credit, you are likely to have a better chance of getting approved for a car loan through a special financial dealership instead of a direct lender for a private purchase. We can also help you find a special financing broker!
Auto loans for bad credit
Here has Auto Express Credit, we know how to give bad credit borrowers the connections they need to get their next vehicle. Finding the right dealer can be tricky, but it doesn’t have to be if you’re starting with us. Fulfill our zero commitment auto loan application form, and we will search for your dealer in your area free of charge.