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Buying a car from a private seller can be tempting, especially when the price is right. But private sales come with risks that you need to be aware of before making a deal. Unlike dealerships, private sellers don’t have the same accountability, making it crucial for buyers to do their homework. Here are some important risks to consider when buying a vehicle through a private sale.
1. Sellers May Not Always Be Transparent
While dealerships rely on reputation, private sellers often aren’t as concerned about being 100% truthful. There’s little downside for them to leave out important details about the car’s condition, especially if it means losing money. That’s why it’s essential to approach private sales cautiously and assume the seller might not disclose everything. Always request a vehicle history report to get the facts.
2. Hidden Liens on the Vehicle
One of the biggest risks when buying from a private seller is the potential for hidden liens on the vehicle. If there’s unpaid work or debts associated with the car, the new owner becomes responsible for them. A vehicle history report should help disclose any liens or outstanding debts, so make sure you check before purchasing. A hidden lien is rare, but a huge pain if it happens.
3. Undisclosed Mechanical Problems
Private sellers may list their cars for sale after a dealer refuses to accept it as a trade-in, often due to mechanical issues. These problems may not be immediately obvious without professional diagnostic equipment. To protect yourself, always have the car inspected by a trusted mechanic before finalizing the sale. Learn more about Pre-Purchase Inspections.
4. Vehicle History Reports Aren’t Foolproof
While vehicle history reports provide valuable insight into a car’s past, they only contain what’s been reported. If an accident wasn’t documented, it won’t show up on the report. To avoid surprises, have a professional pre-purchase inspection check for signs of damage, such as mismatched paint or replaced body panels.
5. State Inspection Issues
Each state has different safety and emissions standards, and just because a car passes inspection in one state doesn’t mean it will pass in another. Things like window tinting, ground clearance, or other modifications can become costly issues. Make sure the car meets your state’s requirements before making a purchase. If you live in a state with strict inspection criteria, buying a used car, especially an older car, will involve a higher risk of a failed state inspection, and the need for costly repairs.
6. Limited Recourse with Private Sales
Unlike dealerships, private sellers aren’t subject to the same regulations and oversight. If something goes wrong after the sale, your options for recourse are limited. Legal action against a private seller can be costly and time-consuming, leaving you with few alternatives if the car turns out to be less than advertised.
How to Protect Yourself in a Private Sale
If you’re considering buying a car from a private seller, take steps to protect yourself. Obtain a vehicle history report, research expected resale values, and get a mechanic’s inspection. These steps will help ensure that you’re making a smart decision and not getting stuck with a vehicle that could end up costing you more in the long run. But here’s the bottom line: unless you personally know the seller and have a high amount of trust in them, it’s impossible to be 100% certain that you are avoiding the risks mentioned here.
Check out the following video for more information on today’s used car market:
As car prices remain high, many buyers are opting for longer car loans to keep their monthly payments manageable. According to new data from Edmunds, 84-month loans are on the rise. In fact, 84-month car loans have grown from 15.8% of new loans in Q1 2024 to 18.1% in Q3 2024. The average car loan term is now 68.8 months, remaining near all-time highs.
While these extended loan terms might lower monthly payments, they come with serious risks that could impact your finances for years to come. Here’s what you need to know, and how to play it smart when financing your car.
1 in 3 Drivers Have Underwater Car Loans
84-month loan terms are becoming popular, but that doesn’t mean they’re a good idea. In fact, far from it. As auto loan rates begin to fall, more car buyers are warming up to the idea of longer loan terms. This is a bad sign of things to come in 2025, unless consumers begin to think-twice about extending auto loans.
Our Q3 2024 CarEdge Negative Equity Report shows that 31% of drivers who financed their vehicle are underwater on their loans. The situation is worse for those with loans longer than 60 months, especially 84-month terms, which lead to slower equity growth and higher chances of negative equity. Among the survey respondents with 84-month loan terms, an astounding 71% are underwater. Clearly, longer loan terms increase the likelihood of negative equity for car owners.
One of the main reasons for this is depreciation. With long loan terms, cars lose value faster than the loan is paid off, leaving borrowers owing more than their vehicle is worth. With a longer loan, the gap between loan balance and vehicle value grows wider, putting drivers in a financially vulnerable position.
Why You Should Avoid 84-Month Loans:
Negative Equity Risk: Longer loans increase the likelihood of being underwater, especially as depreciation outpaces loan payments.
Higher Interest Costs: Even with a lower monthly payment, you’ll end up paying more in interest over time.
Limited Flexibility: Being stuck in a long loan makes it harder to trade in or sell the car, especially if you’re upside down on the loan.
Smart Car Buying Tips:
Opt for a loan term no longer than 60 months to build equity faster.
Consider saving for a larger down payment to reduce the loan amount.
Shop for the best interest rates and avoid stretching your budget just to lower monthly payments.
Protect Yourself From Long-Term Financial Risks
While the allure of lower monthly payments with an 84-month loan can be tempting, the long-term risks far outweigh the benefits. Negative equity, higher interest costs, and lack of financial flexibility are all too common with extended loan terms. To protect your financial future, it’s smart to opt for shorter loan terms, build equity faster, and avoid stretching your budget just to secure a lower payment.
For more in-depth information on auto depreciation, maintenance costs, and total cost of ownership for hundreds of models, visit theCarEdge Research Hub. It’s 100% free!
Fall is underway, and better truck deals are here. With 2025 models arriving daily and dealers eager to sell remaining 2024 inventory, it’s a great time for negotiating, or letting us do it for you. Here’s our guide to the top truck deals of October 2024, featuring low APR financing, cash offers, and lease deals.
Automakers release their deals between the first and fifth of each month, so check back soon for the latest.
2024 Nissan Titan
Starting MSRP: $40,350+
Negotiability Score: Very High (141 days of market supply)
0% APR financing for 60 months
Nissan is fighting hard for truck market share in the U.S., with limited success. Today’s zero percent financing offer is the best truck deal today at 60 months. This offer expires on 11/02/2024.
Negotiability Score: High (181 days of market supply)
2024 Ram 1500 and 2024 Ram 1500 Classic: 0.9% APR for 72 months
Ram trucks are slow-selling, even though they seem to be everywhere you look on the road. To alleviate Ram’s oversupply of trucks, they’re offering huge financing offers this month. This offer expires on 11/02/2024.
Negotiability Score: High (112 days of market supply)
0% APR for 36 months + NO payments for 90 days, or lease for $409/month for 36 months with $4,949 due
With 112 days of market supply, there’s an abundance of 2024 Silverado 1500s on Chevy dealer lots. These APR and lease offers are great deals for truck fans. This offer expires on 11/02/2024.
Download your 100% freecar buying cheat sheets today. From negotiating a deal to leasing the smart way, it’s all available for instant download. Ready to let a car buying pro take the wheel?CarEdge Concierge is the easiest way to buy a car today. Our team finds the vehicle you want, right down to the finest of details, and negotiates on your behalf. Home delivery is available. Learn more about CarEdge’s car buying service.
As manufacturers roll out year-end incentives, buyers are seeing more attractive offers for November 2024. From zero percent financing to cheap lease deals, there’s something for everyone. It’s worth pointing out that automakers update their incentives between the second and fifth business day of each month. Check back for updates this week!
The Best APR Offers In November
Low APR deals are growing in quantity and quality as we approach year-end sales. With interest rates officially falling, more deals are on the way. If you’re interested in any of these cars and trucks, what’s the use in waiting?
0% Financing! Chevrolet, Jeep, Nissan, and Mazda
In recent months, we’ve seen an increase zero percent financing. All of the following models are all advertised for 0% APR in November 2024.
JEEP – All Jeep models, from the Wrangler to the Grand Cherokee, have 0% APR for 36 months right now.
KIA – 2024 Kia EV9, EV6 (0% APR for 72 months). The slower-charging Niro EV is offered with 0% financing for 60 months. Kia is also offering the Sportage and Sorento at 0% APR for 48 months.
Ready to outsmart the dealerships? Download your 100% freecar buying cheat sheets today. From negotiating a deal to leasing a car the smart way, it’s all available for instant download. Get your cheat sheets today!
Negative equity, or being “underwater” on a car loan, is becoming a growing issue for many drivers in today’s market. As vehicle prices soar and depreciation accelerates, more car owners are finding themselves owing more on their loans than their cars are worth. CarEdge, in partnership with Black Book, surveyed nearly 1,000 drivers to understand the extent of this problem in Q3 2024. Here are the key findings.
According to our survey, 31% of drivers who financed their vehicles are currently in negative equity. This number rises to 39% for vehicles purchased since 2022, indicating that newer car buyers are especially vulnerable. As vehicle prices increase and long loan terms become more common, the risk of being underwater is higher than ever.
Most Drivers Overestimate Their Vehicle’s Value
A staggering 61% of surveyed drivers overestimate how much their cars are worth, with 17% believing their vehicle is worth at least $5,000 more than its true trade-in value. This disconnect can lead to unpleasant surprises when drivers try to trade in or sell their cars, often rolling over negative equity into their next auto loan and perpetuating the cycle.
Longer Loan Terms Lead to Greater Negative Equity
Our data shows that loan terms directly impact vehicle equity. Car owners with 84-month loan terms are nearly $5,000 underwater on average, while those with 36-month loans typically have $12,340 in equity. Although longer loans reduce monthly payments, they also increase the likelihood of negative equity in the long term.
EV and Luxury Car Owners Are Hit Hardest
Electric vehicle owners are significantly more likely to be underwater. Of the EV owners we surveyed, 46% are currently in negative equity, with a median loan-to-value (LTV) ratio of 0.94—higher than the broader market’s 0.73. Luxury car brands like Tesla and BMW also see higher rates of negative equity compared to budget brands like Toyota and Honda.
A Concerning Trend for 2025
As more drivers find themselves underwater on their car loans, the negative equity issue is poised to become a major challenge for car owners and the auto industry alike. While budget car buyers may fare better, EV and luxury car owners are disproportionately affected.
CarEdge remains committed to providing insights and tools to help consumers navigate today’s car market. To learn more about vehicle equity and stay informed on auto news and market trends, visit CarEdge for expert analysis and guidance. For more information about Black Book’s industry-leading data and analytics, visit BlackBook.com.
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