Home General Steps to Help Protect Yourself When Selling A Car

Steps to Help Protect Yourself When Selling A Car

Selling your car yourself can be easy and profitable, especially if you start with an online ad on KBB.com. Even so, there are a few important things to keep in mind. These simple steps will help protect you and help make the process go smoothly.

The following is not intended as an exhaustive list of everything that may be involved in your sales transaction, as each sale is different. Be sure to also check the laws and regulations in your particular state.

1: Screen callers thoroughly

Listing your car on KBB.com may bring e-mails, text messages and calls from interested parties. We suggest that you insist on speaking to the most serious buyers over the phone before scheduling a test drive.

A conversation will allow you to screen potential buyers by asking several questions, such as what their needs are and whether they have financing lined up. Invite buyers to ask questions as well, as this will help you gauge how serious they are about your car.

Beware of anyone who offers to buy your car sight unseen. It’s best to sell to someone in your area who you can meet in person. We recommend that you tell prospective buyers that you don’t accept out-of-state checks. Some banks may want to see the vehicle if the buyer is getting financing.

For your own protection, you should make sure your insurance coverage extends to other drivers, and mention over the phone that you’ll need to see the potential buyer’s driver’s license before handing over your keys.

2: Take precautions with the test drive

If the caller seems legitimate and ready to buy and you want to set up a test drive, you should pick the place, which should be a safe, central meet-up location in a public place, ideally near a relaxed test drive route.

Meet prospective buyers during the day in a public area (such as the parking lot of a mall or near their bank). Park the car in a high traffic area where people can see you.

Plan a test-drive that’s short and sticks to populated areas. Most buyers don’t expect a long test-drive. If your buyer wants more time, let him ask you for it.

Before the drive, ask to see their license, and always accompany the driver on the test drive — regardless of what kind of collateral they offer in exchange for driving it. Always plan ahead and ask a friend or family member to join you for the ride.

3: Ensure a safe transaction

If the person is serious about buying the car, he or she will likely want to negotiate the price. Ideally you’ve discussed forms of payment in advance, and once you’ve settled on a price, you should meet them at their bank or credit union to complete the transaction.

Refuse any unusual requests, such as driving the would-be buyer to another location. Often, such a request is framed in terms of getting the money or arranging a loan to finish the sale. Instead, tell the buyer to make his arrangements on his own, leave a deposit and call you back when he is ready to conclude the sale.

If the test drive begins and ends at your home, conduct the transaction at the curb instead of letting the buyer into your house. Have the paperwork ready beforehand and keep the car’s title, unsigned and out of sight until you have full payment.

Be sure the form of payment is legitimate. The Federal Deposit Insurance Corporation has created a website, FakeChecks.org, to help detect fraudulent checks. Also, beware of any checks made out for more than the negotiated purchase price – whereby the buyer requests a cash refund from you. (The bank might initially accept the deposit, but has 30 days to reject a fraudulent document.)

Beware of fraudulent escrow services and protect yourself with secured payment

For a fee, an escrow service holds the buyer’s payment until the seller has delivered the item purchased. Such a third-party service can protect both parties from fraud. However, scammers often set up fake escrow services. They claim an affiliation with well-known companies like KBB.com and TRUSTe, for example, to create a sense of security. KBB.com does not endorse any escrow services and TRUSTe does not operate an escrow service.

Remember these tips before you agree to use an escrow service:

  • Avoid any payment or escrow service that implies an affiliation or partnership with KBB.com.
  • Avoid any escrow service that claims to be operated by TRUSTe. TRUSTe doesn’t operate an escrow service.
  • Verify an escrow service’s legitimacy by checking with state regulators.
  • Research the escrow service.
  • Decline the transaction if the other party insists on using an escrow service that you’re not sure about.
  • Use a search engine to open the website in a different browser-don’t click on a link the seller provides.
  • Dial the contact number listed.
  • Search for the company on the Better Business Bureau website.

And once you find an escrow service you’re comfortable with, be sure you understand:

  • What conditions must be met before the payment is released to the seller
  • What the escrow service charges
  • Which party is expected to pay the escrow fees

If any escrow-related email or website implies an affiliation with Kelley Blue Book by displaying our logo or by other means, report it to us and law enforcement.

4: Keep a paper trail

It’s important to maintain a paper trail when selling a car. At a dealership, the paperwork is handled for you. But when you sell to an individual, it’s your responsibility to make sure you make the transfer properly. A little legwork upfront can eliminate hassles down the road.

Each state has different rules regarding proper title transfer, but most require that the both the seller and the buyer fill out paperwork to ensure the transfer is legal.

In many states, the seller signs the back of the existing title along with the date, sale price and exact odometer reading* before handing it over to the buyer. You should also make a copy of the signed title (both sides) for your records.

RELATED: How to sell a car without a title

*Providing an accurate odometer reading is critical when you sell. Once you sign off on the title, the odometer reading provides proof of the moment in time the car is no longer legally yours. Don’t round it up — the buyer could have an accident within two miles of the sale, and claim that you are responsible.

Most states recommend that buyers and sellers complete a "bill of sale" along with a "release of liability" form to provide proof of the transfer and to protect the seller from any future tickets, violations or other problems with the vehicle. DMV.org, a clearinghouse of all state DMVs, provides a sample Bill of Sale as well as Release of Liability information.

Send in the signed "release of liability" to your state DMV. This is important to ensure that the seller is not held responsible for anything that happens to the vehicle after the sale.

In many states, you will be required to turn in your license plates to the DMV and get a receipt, which cancels the registration of the vehicle in your name.

5: Block out your personal information

Before you hand over all the service records to the buyer, be sure to block out any personal information with a big black marker, such as credit card numbers, phone numbers or any other information you do not want made public. If you originally bought the car from a dealer, you may have left a contract or completed credit application in your glove compartment or owner’s manual. In the wrong hands, this is a perfect tool for identity theft, as it may contain your social security number and previous address.

6: Complete the title transfer

Check with your state’s rules regarding title transfer. In many states the buyer needs to complete the following to complete the transfer of the vehicle:

  • Retitle the vehicle
  • Register the car in his or her name
  • Pay transfer fees, including state taxes

All three steps can be completed at a local AAA or DMV location.

Most states require the seller to provide the buyer with a recent (e.g. within 90 days) passed smog check or state inspection certificate before transferring ownership. Be sure to have this available at the time of sale. (You can find your own state’s rules on title transfer here.)

Some states also recommend that sellers take the additional step of notifying the county tax-assessor’s office of the sale, which provides another layer of protection in the event the future owner fails to properly title the vehicle.

Keep in mind that the overwhelming majority of private car sales go off without a hitch – delivering more money for the seller than a trade-in offer. But like any transaction, it’s important to be smart and take the right preventive measures.

If you have questions or suspect fraud or scams, please email fraudwatch@kbb.com. Or call the Fraud Prevention Team at 1-877-210-5209.

What to do if you suspect fraud

  • Step 1: If you are the victim of a scam, please email us at fraudwatch@kbb.com with as much information about your particular situation as possible.
  • Step 2: Forward any suspicious emails to us immediately at fraudwatch@kbb.com. Don’t change the subject line or send it as an attachment because doing so could prevent us from identifying trends and preventing similar scams. To speak directly to a Customer Service Representative, call 1-877-210-5209.
  • Step 3: File a complaint with Internet Fraud Complaint Center to inform federal and state law enforcement agencies. We strongly recommend that you report fraud to local law enforcement as well.

Kelley Blue Book investigates submitted reports in an effort to protect our customers against future fraud. We support law enforcement agencies in the prosecution of Internet criminals and work diligently to prevent fraud.

The following government agencies provide additional outlets for concerns about fraud:

Some Tips on Spotting a Scam

There is no foolproof way to prevent fraud, but awareness can be your best defense. Review our tips below and use your best judgment in all transactions.

Beware of email requests for personal or financial information

Online fraud often begins with a scam email requesting financial information. These emails, also known as spoofs, often impersonate a reputable company such as Kelley Blue Book by illegally displaying a company’s name, logo or trademark.

The intent is to deceive customers into revealing information such as:

  • Username
  • Password
  • Social security number
  • Bank account number
  • Bank routing number
  • Credit card number

The only time Kelley Blue Book or KBB.com will ever request your credit card information is when you’re in the process of purchasing a listing on our website. We will not take down your listing because you don’t provide account information. If you receive an email that asks for the kinds of information listed above, don’t respond. Instead, reportthe email to us and to law enforcement.

Beware of emails that appear to come from Kelley Blue Book or KBB.com

Kelley Blue Book does not get involved in sales transactions between buyers and sellers. If you receive an email that appears to come from Kelley Blue Book or KBB.com urging you to complete the sale or purchase of a car listed on our site, do not respond. Such emails are a sure sign of a scam, even if they display our logo.

Other signs of fraud are emails that:

  • Claim the security of a transaction is guaranteed by KBB.com
  • Imply we’ve verified information about a particular buyer, seller or listing
  • Describe a "preferred" or "pre-approved" buyer or seller program

KBB.com does not guarantee or endorse transactions, and we don’t have preferred or pre-approved buyers or sellers. We’ll never encourage you to buy any particular vehicle listed on KBB.com or to sell your vehicle to any particular buyer. If you receive a suspicious email such as the ones described above, report it to us and to law enforcement.

Beware of emails implying Kelley Blue Book or KBB.com is selling, buying, shipping or warehousing vehicles

We don’t own, buy or sell, warehouse or ship vehicles listed on our site. Simply put, we don’t get involved in transactions between buyers and sellers.

Any email that requests a deposit or payment for a transaction or shipment of a car stored in a KBB.com warehouse is a scam. KBB.com doesn’t own a vehicle warehouse, and we don’t ship cars.

There are many reputable warehousing and shipping services that can make long-distance transactions easy. Just be sure to check out the services proposed on your own.

If you receive an email that implies we’re selling or buying a vehicle, or if a seller recommends a bogus warehousing or shipping service, please report it to us and to law enforcement.

Beware of requests for payment to enter a sweepstakes

KBB.com may offer promotional contests from time to time, but we do not require payment to enter a sweepstakes or to claim a prize. If you receive an email that claims we’re holding a promotional contest or sweepstakes, check our website for accurate information. If you don’t get confirmation from us that we’re holding a contest, don’t participate.

Don’t click any links embedded in email messages. A link may look correct, but the code behind it could take you to a different website. Copy and paste a link into your browser’s address bar.

If you think you’ve received a fraudulent email involving a promotional contest, report the email to us and to law enforcement.

Beware of flood-damaged vehicles

Hurricane Katrina flooded an estimated half a million cars. These damaged vehicles may make it into the used car market all over the U.S. and may be sold to unsuspecting buyers.

Be aware that flood-damaged vehicles may have been:

  • Submerged in water and covered in mud
  • Contaminated with toxic chemicals
  • Carrying large amounts of harmful residue
  • Corroded, causing damage to electronic components

To avoid purchasing a flood-damaged vehicle:

Obtain a vehicle history report

An AutoCheck vehicle history report can provide useful information, such as who holds the title, whether the car has been in an accident and if it was ever reported stolen, salvaged or damaged. Though this information may be very helpful, it’s important to remember that it may not have all the details related to your vehicle.

Inspect the car 

Schedule an inspection with a professional, mechanic who is trained in handling flood-damaged vehicles. Look for mud or mildew under the carpets, in low areas such as the trunk floor, and in enclosed areas such as doors, panels and gas tanks. Inspect headlights and door panels for a water line. Avoid skin contact with fluids, and use protective nitrile-membrane gloves when possible.

Verify the title 

Don’t just look for Louisiana titles. Damaged vehicles may have been registered out of state. Also, keep in mind that titles can be altered and transferred to different states, and not all states require that a vehicle’s title indicate whether or not it has been salvaged.

Check the VIN in the national database 

The National Insurance Crime Bureau compiled a database of vehicles involved in recent hurricanes. Check the VIN free of charge to help determine if the vehicle was involved in either Hurricane Katrina or Rita. Keep in mind that there may be vehicles affected by the hurricanes that are not included in this database.

If you own a flood-damaged vehicle, contact your insurance company.

Your insurance company can work with vendors to determine if your car is worth repairing or if it needs to be declared a total loss.

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