Let’s face it. Selling your car can be a hassle. Time and Money are the two main issues people face when doing so, then there is the liability issue. Do I sell it myself to private party? Use an auto broker service or sell it to an auto dealer buying service? It can be a daunting task. People ask me frequently should I sell Private Party, Broker or Dealer. Below outlined a few obvious concerns.
Sell
Private Party sale - selling your vehicle private party unusually earns the most money one expects to make than selling to an auto dealer. Although more money is appealing, it is not always hassle free. After selling your vehicle, you may have the private party calling or harassing you about problems with the vehicle you just sold. Other issues may arise that can be serious when the new owner does not transfer ownership. You could find yourself responsible for the vehicle or a fraud claim. DMV will require a current (good for 90-days) smog certificate to facilitate the transfer. Actually, each time a vehicle is sold, a current smog certificate is required. Best practice – do not cancel automotive insurance and go to DMV with the buyer to assure the vehicle is out of your name.
Auto Dealer - selling to legitimate Dealer is the safest and easiest way to sell your vehicle because the dealer assumes all responsibility. It is sold As-Is. Seller is not responsible for future repairs. Once the dealer hands you compensation for your vehicle, they own it…unless they can prove fraud. Since the CA DMV demands an auto dealer to have a license and a bond (50K), there is no dispute between ownership and any liability once the vehicle is sold and compensation transfers hands. One could always have a claim against a dealer’s bond up to 50K. Several other advantages exist by facilitating a dealer.
- No smog needed.
- Registration need not be current.
- Loan or Lien not satisfied
- Cancel insurance
Broker
Auto Broker – selling with a broker is nothing more than a middleman. The role of a broker is to find a willing party to buy a seller’s vehicle and charge a fee to do so. They bring together a seller, buyer, and profit from it. Using a vehicle broker to sell a vehicle can be attractive, but it may not always be the best option - depending on time, money and liability. One should know there is a liability factor that exists even in the hands of the most reputable broker. Legally the registered owner/legal owner is the responsible party if it comes down to litigation. This factor does not go away until ownership transfer is complete. As long as a broker is in possession, driving around, test driving, etc., it is technically still the responsibility of the registered/owner. Insurance cost continues.
How long will it take to sell? Some brokers give 60 – 90 days and charge fees along the way. If there is no sale within the time limit, either a new contract is negotiated or the vehicle is returned. If it sells, the broker is required to pay the seller no longer than 21-days from the date of sale. Repairs are another issue. The broker and seller can negotiate repairs, who performs the repairs, and who bears the cost, all done prior to sale.
Beware! Some brokers are skirting laws and deceiving the public. One broker claims to offer the highest return to sell a car, but in the end they do not deliver. Actually, it cost hundreds and even thousands of dollars more as opposed to a legitimate dealer. Watch out for unnecessary fees and bogus repairs! This is how they profit. Once a contract is signed with a broker, they must adhere to it. A popular scheme is to bait-and-switch. Bait you by promising a high sell price, then sell and offer less by deducting bogus repair fees and charges. Additionally, how does anyone ever know the final selling price of a car? Bottom-line - If you decide to sell your vehicle on the spot, no additionally fees (DMV, repairs, transportation, and seller fee) should be added. The offer should include all fees.
Below is an example of a Consignment agreement that must contain all the following terms and disclosures under California Law - Vehicle Code 11729.
- The date the agreement is executed.
- And all of the following statements:
- “I (We), the undersigned consigner(s), hereby consign and deliver possession of my(our) vehicle, which is a (Year) ____ (Make) ____ (ID#) ____ (License) ____ (State) ____ (Mileage) ____, to (Consignee) _____ (Dealer #) ____ for the sole purpose of selling the vehicle and paying, to the consignor or his or her designee from the proceeds of the sale of the vehicle, the amount agreed upon under terms of this agreement. This agreement is effective and valid only for a period of ____ days from this date.”
- “At the termination of this agreement, the consignee shall return the vehicle to the consignor, or, at the option of both the consignor and consignee, enter into a new agreement.”
- “If the vehicle is sold by the consignee during the term of this agreement, the money due the consignor shall be disbursed within 20 days after the date of sale in accordance with the terms of this agreement. As used in this agreement, a “sale” occurs when the consignee either (A) receives the purchase price or its equivalent or executes a conditional sales contract for the vehicle, or (B) when the purchaser takes delivery of the vehicle, whichever occurs first.”
- “The following information shall be completed prior to the signing of this agreement: Current market value: $____ Source: ____. Outstanding liens: $____ Lienholder: ____. (Any difference between the outstanding amount shown and the actual payoff to the lienholder will be credited to the consignor.) Repairs to be made: $____ Work Order #____. Moneys to the consignor: ____ percent of sale price, flat fee of $____ or the following specific formula: ____.”
- “Within 20 days after sale, the consignee shall make an accounting to the consignor of all of the following: date of sale, repairs authorized by consignor (supported by work records), exact amount of any liens payable to lienholders, evidence of payment of any liens, and the total sales price.”
- “The consigned vehicle is delivered to the consignee in trust for the exact terms set forth in this agreement. The consignee agrees to receive this vehicle in trust and not to permit its use for any other purpose other than contained in this agreement without the express written consent of the consignor.”
- “Upon payment of the moneys due the consignor, the consignor agrees to furnish the consignee those documents necessary to transfer the ownership of the vehicle to the purchaser.
- Signatures:
