When you choose to sell a vehicle privately and allow someone to make payments on it, it is important to make sure that you take the time to properly protect yourself if the person chooses to stop making payments. Many people make the mistake of thinking that only large car dealerships can repossess a car when someone stops paying for it. That is not the case at all though. Use the guide below to learn how to protect yourself when selling a car privately.
Keep the Title to the Vehicle
Do not make the mistake of giving the purchaser the title to the car until the entire purchase price is paid in full. If you sign over the title to them, they can claim that they paid for the car and there will be little to nothing that you can do to get the money you are owed, other than possibly take them to court. It will be a long and drawn out process to sue them for the money they owe you, but if you keep the title, you can repossess the car when they default on the loan.
Create a Written Agreement
When you sell the car, have a written agreement that outlines specifics about the sale of the car. The purchase price, VIN, and date of the month that payments must be paid should all be included in the agreement. Be sure to indicate how long of a grace period you are willing to give them each month and if there will be a penalty for paying a payment late.
Keep Accurate Records
Keep a log book that indicates how much the person paid on specific days. Be sure to write them a receipt for their payments so that both of you have proof for all payments that were made. Keeping an accurate record for when each payment was made is important in case you do have to repossess the car and the person decides to sue you to try to get it back or be reimbursed for the money they paid toward it.
Hire a Tow Company Right Away
If the person has neglected to pay a payment on the car and is refusing to contact you to tell you what is going on, have the vehicle repossessed as soon as possible to ensure that the car is not damaged or hidden. The tow company may ask to see proof of ownership before towing the vehicle so be sure that you have the title readily available to show the company. Also, you need to know where the vehicle is located so that the company will know where they need to send their driver. Contact a towing company like Marv's Quality Towing Inc to learn more.
Once the car has been repossessed, you may want to put an alarm system on it. The person will still have the keys to the car and could come and take it when you are not near it. Having an alarm on the car will alert you if anyone tries to take the car without your knowledge.
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