You’ve certainly heard all the warnings when you’re buying a car privately: beware of curbsiders, have the vehicle checked over, get a history report, and so on. But do you know how to protect yourself when you’re selling a car?
While there are laws that protect buyers, there are legal gaps when it comes to sellers, according to Ellen Roseman, personal finance and consumer columnist for the Toronto Star. “There is so much in the news about buying privately, and how the buyer is subject to fraud,” Roseman says. “There is access to information, and inspections, but there’s nothing for private car sellers. Even if it doesn’t happen a lot, the consequences can be disastrous.”
Roseman was asked to intervene in the case of a man who sold his car privately in 2008, but earlier this year, received a $798 bill for towing and storage charges. It turned out that while buyers in Ontario have six days to change the ownership, it had never been done.
As a result, when the buyer defaulted on his towing bill, it went to the seller, who was still the registered owner. Roseman was able to get the company to waive the charges, but legally, it didn’t have to do so.
First line of defence…
Your first defence: keep the car, and the keys, until you’ve actually seen the ownership with the buyer’s name on it. Even if you know the person, it’s still a good idea, since they might put it off until it’s convenient. You could be liable for damages if something happens, such as if it’s stolen and crashed.
It’s a reasonable request, so if the buyer balks, you may have someone who wasn’t intending to switch the ownership over, for whatever reason.
Roseman also warns about people, often tow truck drivers or mechanics, who offer to buy clapped-out cars for a few dollars for scrap. Many people just hand over the ownership, assuming the car will be crushed shortly afterwards. However, it’s not uncommon for these to be resold and kept on the road, and if you haven’t seen the ownership changed, you could still be responsible for the vehicle.
Once you’ve advertised your car, consider your personal safety. You will be dealing with strangers. Earlier this year, an Ontario man was murdered when he advertised his truck online and took it to a potential buyer.
If you agree to meet someone, make sure you’re going to a busy public place, and never go alone. Ask for the person’s name and phone number beforehand, and then call back to see if the number is accurate.
It’s not ideal to have a buyer come to your house, but if it must happen, don’t be on your own. Have a friend or family member there with you. Close your garage door so no one can see inside, and if possible, find another place to park other cars you own.
Ask to see identification when you meet the person, and look at his driver’s license, including the expiry date, if you’re going to let him test-drive the car. Honest buyers shouldn’t have any issues with proving they’re legitimate.
Matters of money
If he agrees to buy the car, don’t let your guard down. Cash is best, but if you take a cheque, make sure it’s certified. You may want to hang on to the car until you’ve cashed it. You could also consider a bank transfer, or online options such as an e-transfer or PayPal.
Roseman warns about overpayment scams, where a buyer may tell you he’s been given a cheque or money order for more than you’re asking, and he wants you to cash it, deduct the price of the car, and give him the remainder. Never agree to anything that requires you to give money to the buyer.
Sell to a dealer?
So after all that, is it worth selling your car privately? That’s a decision you’ll have to make, but consider a trade-in among your options.
You’ll undoubtedly get less for it than with a private sale, but you also won’t have to deal with tire-kickers, or the guy who likes the car and wants to think about it, and after you’ve told three other guys that you’re holding it for him, he backs out. You won’t have to keep plates and insurance on it for test-drives, or watch strangers of various ability pilot your vehicle. If the car’s financed and you were counting on paying it out with the money, you may be making double payments—on it and its replacement—if it takes a long time to sell.
With a trade-in, you drive it to the dealer, sign it over, and drive out with your new vehicle, usually on the same day. Depending on where you live, your trade-in’s value may offset some of the sales tax on the new car you’re buying, too.
In the long run, it’s possible that the convenience may well be worth the difference.