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Your Guide to Buying a Vehicle from a Private Seller

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Buying a vehicle is one of the biggest purchases you’ll make.

It’s exciting. It can be stressful. But it can be a good stress if you’re armed with heaps of car-buying knowledge. The process at a dealership is straightforward, as they’ll steer you through all the steps before you drive off the lot. Buying from a private seller while securing financing just requires a bit more planning and preparation, and this guide will get you there.

Loan Approval

Unless you’ll be paying cash for a car, you'll want to secure financing with an eye toward how much you're able to spend each month over the course of a loan. Follow these steps to quickly get preapproved for a SELCO vehicle loan:

1. Set your budget

Take a thorough look at your budget and check out SELCO’s Auto Loan Calculator to determine how much vehicle you can realistically afford. SELCO’s Loan Officers ask prospective borrowers for a comfortable payment range, and depending on that figure, it may allow for some wiggle room for adding GAP or Extended Warranty coverage. Depending on your situation, your financial institution may require a down payment (typically 10%). Important note: This money comes out of your pocket, not via a loan.

2. Secure a loan

Now that you've determined your budget for a vehicle purchase, it's time to get preapproved for a loan. Here’s how:

Apply at selco.org. Check out our rates and apply for loan preapproval on our website. (Allow up to 48 hours for a decision.)

Apply over the phone. Call SELCO at 800-445-4483, option 1, to request a vehicle loan. An experienced SELCO Loan Officer will guide you through the entire loan process and answer any questions you may have. During this call, it’s helpful to:

  • Have a general idea of how much you want to spend (overall and a payment range per month).
  • Provide an example make/model/year of a vehicle you’re considering.

A SELCO Loan Officer will then be able to crunch the numbers to determine the amount you’ll qualify for and which term (SELCO offers up to 96 months of financing for well-qualified buyers) will work best for you.

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Car Purchase

Listings for vehicles are everywhere online, or perhaps there’s a For Sale sign in the window of a prospective car just down the street. After finding out how much you’re preapproved for, you’ll want to look for vehicles within that price range. If a new car isn’t in the cards, it's important to find a used vehicle with a reasonable number of miles that’s in good shape. To give yourself a little purchasing leverage, jot down any details the seller provides so you can assess the value of similar vehicles on the market.

Keep in mind that purchasing vehicles out of state can be more complex than buying locally. For instance, an out-of-state vehicle must pass a Department of Environmental Quality (DEQ) emissions test to complete registration. Oregon also requires a VIN inspection , which involves a trip to the DMV, for any used vehicle bought out of state.

Don’t want a car to slip away? It couldn’t hurt to use your loan preapproval letter from SELCO and/or a cash deposit to hold the vehicle while you take care of the following:

1. Take the car for a test drive.

Even if the vehicle you’re eyeing is out of state, be sure to take it for a spin early on. Online pictures and details likely won’t reveal mechanical problems, ripped upholstery, rusted exterior, odors, etc.

2. Negotiate a price.

Don’t necessarily settle on the seller’s asking price. A SELCO Loan Officer can quickly look up the blue-book value of the car you’re considering and email you a printable document with the details. You can use this quoted value to potentially negotiate with the seller.

3. Check out the vehicle’s history.

A vehicle history report will show ownership, service, accident, and title histories. This report can reveal undisclosed issues, including whether the odometer has been rolled back or if it has a salvage title. You can even obtain this information for free through services like the National Motor Vehicle Title Information System or VINCheck® Lookup.

4. Have the car inspected.

Take the car to a mechanic—preferably one of your choosing, not the seller’s—to get a pre-purchase car inspection. Depending on the mechanic’s availability, an inspection can be completed in an hour—and you can even arrange for the seller to meet you at the shop. If the seller is concerned about having an inspection done, proceed with caution.

5. Confirm loan details/eligibility.

The car passed the inspection, and you’ve agreed on a price. Time to go back to your lender to lock in the details. The age of the car will impact the rate on your loan. Interest rates on “new” vehicles typically apply to not just factory-fresh, never-driven cars, but also the last several model years, and a well-qualified buyer can get the lowest interest rate SELCO offers. For a used vehicle, the interest rate would be a bit higher.

6. Get an insurance quote.

You’ll be required to have insurance for your car, so save a step later by checking insurance rates for the type of vehicle you’re considering. SELCO Insurance Services can help you with this.

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Documents and Funding

Before you can get the keys to your new ride, there will be some paperwork to fill out and a few details to work through.

1. Transferring the title

To begin the process of transferring the vehicle’s title, you’ll do the following:

  • If the seller doesn’t owe money on the vehicle (often called “free and clear”): Simply take a picture of the title and email it to your SELCO Loan Officer. This helps SELCO establish ownership, verifies the vehicle identification number (VIN), and determines whether the vehicle has a salvage or reconstructed title, which limits SELCO’s lending capabilities.
  • If the vehicle is currently financed: Email a picture of the seller’s vehicle registration to your Loan Officer and have the seller provide your SELCO Loan Officer with a 15-Day Payoff Letter from their lender. This letter shows SELCO what the balance will be 15 days down the road so we can pay off the existing loan. SELCO can request this letter, but the best practice is for the seller to obtain the payoff letter. This can help build trust between the two parties, as the seller can work directly with a SELCO Loan Officer.

2. Transferring the registration

To ensure a smooth transfer of the vehicle’s registration, take a picture of the car’s license plates to show SELCO:

  • If the tags are set to expire before the title work is processed by the DMV.
  • Whether the car has personalized plates the seller will want to keep.

While not a requirement, this practice is beneficial in avoiding hiccups along the way. It also would be a good idea to obtain a Vehicle Trip Permit from the DMV. This permit—which gets taped onto your back window—allows you to drive on Oregon roads until your registration is processed and you get your license plates.

3. Making sure you’re insured

Having a vehicle insurance policy in hand before driving away in your new ride is essential. (The last thing you want is forced insurance from a lender, which is expensive and only protects the lender.) But how do you get insurance for a car you don’t own yet? Good question. Here’s how it works:

  • Even without a vehicle identification number (VIN), an insurance agent can still use all your other information—you may even provide the make/model/year of a vehicle you’re considering to receive a rate quote—to prepare a policy that’s ready to go when you take ownership of the car.
  • If you already have car insurance, you’re typically given a grace period of at least a week to officially add your new vehicle and lienholder information to the policy. For teens getting their first vehicle, parents or legal guardians can add them to their policies.

4. Setting your financing parameters

As your SELCO Loan Officer prepares the final documents, create a payment schedule for your loan:

  • Choose the due date for your monthly payments (and when you’d like them to begin). Your first payment can occur up to 45 days from the date your loan is funded.
  • SELCO can set up automatic payments for you. If you opt for an internal transfer such as Bill Pay, be sure to set the payment far enough in advance to arrive before the due date.

5. Signing and sealing the deal

You’re almost there. After completing all the steps above, SELCO will process the remaining paperwork and send you a set of loan documents (all in one email) to sign. These can be signed in person or electronically.

For the smoothest experience, you and the seller can meet at a SELCO branch and sign the final documents in front of a Loan Officer to ensure it’s done properly. (Note: The Oregon DMV only allows wet signatures on its documents; this process varies in other states.) We highly recommend you sign all the loan documents electronically before you come into the branch to sign the DMV docs. Depending on the seller's situation, the list of documents to sign will differ slightly, as detailed below.

Vehicle Financed with a Lender?

SELCO will mail a payoff check and an Authorization for Payoff document signed by the seller to the current lender. Any difference between what the seller owes on their loan and the sale price will be provided to the seller in a separate check. The seller’s lender will then mail the title directly to SELCO. Once you’ve paid off your loan, SELCO will release its interest in the vehicle and mail the vehicle’s title to you. Here’s the full list of documents that will need to be signed at the end:

DMV docs:

Can be signed electronically by the seller releasing interest:

  • Authorization for Payoff

Vehicle Owned Free and Clear?

You and the seller will want to schedule a meeting with your Loan Officer to sign these forms. SELCO will be in possession of the vehicle’s title until you pay off your loan. Here’s the full list of documents that will need to be signed at the end:

DMV docs:

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Whew. Seems like a lot, doesn’t it? Yeah, it is. But by completing these steps as you go, you won’t get blindsided by the unexpected, and all that will be left is turning the key in the ignition of your new ride.