Q&A: Buy a Car On Craigslist? Do This First

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Q: Our old set of wheels gave out and my husband and I want to buy a good, used car. What about buying on Craigslist? We’ve heard some good deals are there, but I’m not sure I’d trust it. What do you hear?

— S. Rickett, St. Louis

A: Craigslist has an old-fashioned flea market vibe to it, and that’s both a good and bad thing.

You really never know what you’re going to get when you visit the site, but there are some jewels to be had, as far as used cars go, if you take some precautions.

We’d recommend you start with some homework. Craigslist is, for sure, a viable option for car buyers. The company is expected to earn $99 million in 2010, according to Wall Street estimates, and that’s not chump change. So it’s not like you’re dealing with some fly-by-night operator. Craigslist may have the .org behind its name, but don’t let that fool you — it’s out to make a profit and companies that provide bad customer service experiences usually see those profits threatened.

So it’s in its best interest for Craigslist to give you a good used-car experience.

Start by learning how to best use the site. To save you some time, we checked out the various “how-to” websites on Craigslist and highly recommend About.com’s suite of Craiglist tutorials.

Once you're familiar with the site, apply these used-card buying tips to minimize any potential trouble buying an auto on the site.

Keep it local. You’ll want to drive the car before you buy it, and you should also have it examined by a mechanic for any signs of trouble. That’s not tough to do inside of your own area code. But outside of it is a different story. It’s much easier to check out a local deal than it is a deal three states over.

Don’t agree to have your car shipped to you. Craigslist is upfront with the fact that you should be cautious of having a car shipped to you. Way too often, an offer to ship a car is tied to a scam. You always want to pick the car up yourself. If a seller says that’s not possible, take a pass on the deal.

Know the estimated value. Judging a used car’s value is highly subjective. The term “used” connotes dings, dents, wear and tear and other potential trouble spots. But you can still get a good handle on a specific car’s value by checking its blue book value. Websites like Kelley Blue Book can give you a good idea of what to pay for that new set of wheels you admire.

Write up a contract. Nothing fancy here, just something legal that holds both parties accountable in a Craigslist used car transaction. You really don’t even need a lawyer’s help; just a signed document stating what is going down in the transaction and who is responsible for what. Start with this website — it has some good sample used-car agreements.

Never give out personal financial data. There is absolutely no reason why the seller needs your credit card number or your Social Security number. So don’t give it out. Also, don’t pay by cash — the risk of theft is too great. A regular check or a third-party payment service like Pay Pal are better bets.

Always complete the transaction in person. This is a no-brainer, yet people fall victim to scammers all the time. Try to pay the seller in person, and not before you get the keys and paperwork for your new car in your hands. A seller who says, “send me a check and I’ll send you the car” is not to be trusted.

“Trust” is a key word in the Craigslist used-car market. Like former President Ronald Reagan used to say about the Soviet Union, “Trust – but verify.” Words to live by in your used car search. Best of luck.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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