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Know the car's story
There are records on specific vehicles that have had title changes, made part of accidents, have been in floods or totaled and reborn as "salvage" vehicles, or that have other hidden issues.
You may use the unique Vehicle Identification Number (VIN), which is present on each car, to know the story of that particular auto. You apply for a single car report or inquire on multiple vehicles if you are shopping around. These reports aren't expensive and are a good investment, considering the possible problems that may arise with a car that has a bad history.
Maintenance records might be helpful
Ask for maintenance records if there are any. They will provide you with the information on previous repairs and problems fixed by the owners.
Close the deal
A Bill of Sale is required to close the deal. A Bill of Sale is used for protecting both you and the seller, and allows a proper record of the sales transaction.
A Bill of Sale is a bright idea, even if it's not required by your state's law. It contains a description of the car, VIN, sale date, purchase price, dates, signatures, and other important data that may be helpful for auto loan.
To the buyer, a Bill of Sale is simply legal proof of purchase. It it may serve as a temporary title/registration if there are any questions from the police, or used for auto insurance and securing a purchase loan.
To the seller, a Bill of Sale is a form of protection from disputes that might arise from the of the buyer.
Know the law
Most states have special laws and regulations concerning used car loans. Get additional information from your state Department of Motor Vehicles (DMV) or their web site.
Pay the dealer
Make sure to pay the dealer with cash, a cashier's check, or a check from your lender. Some dealers do not accept cashier's checks because of their counterfeit potential. In this case, consult with your bank to be able to pay in cash.
In case the dealer has to pay off a loan before getting the title, it's a tricky situation for both. It involves a degree of trust to the dealer that has to send you the title later. If you aren't sure , you can both go to the sellers bank to perform the final part of the transaction. In case the seller is from out of town, he could opt for a short-term personal "bridge loan" to clear the car loan and obtain the title before you pay him.
Keep in mind, that a seller who doesn't have a title may be offering a stolen car.
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