Three people discussing a car deal.

How To Sell A Car: A Step-By-Step Guide For First-Time Sellers

5-Minute ReadNovember 18, 2021

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If you’re ready to part with your car, you might be uncertain where to start the sales process. This step-by-step guide is perfect for first-time sellers, and it walks you through everything you need to know.

Step 1: Organize Your Paperwork.

You’ll want to gather several documents before you can advertise your car for sale:

Car title: Make sure you have your vehicle’s title in your possession. Without it, you can't sell to a private party. If your car is still under an auto loan, call your lender to learn how to transfer the title when the time comes to transfer ownership. 

Vehicle history report: Your vehicle identification number (VIN) gives you access to your vehicle history report, which states the title status, the number of owners, significant accidents and claims, the most recent odometer reading and service records.

Service records: It’s best to have your most recent service records ready so you can show that your vehicle is well maintained and has no current problems. 

State-specific paperwork: Check your local Department of Motor Vehicle’s website for any important papers, such as a bill of sale, you might need to sell your vehicle.

Step 2: Research How Much Your Car Is Worth.

The next step for selling a vehicle is to research how much your car is worth. With your VIN, license plate number or even just by make/model, you can look up the Kelley Blue Book value of your car. You’ll get an even better idea of your local market value by looking up other cars for sale in your area. Try to find the exact car make, model, year, features and condition to get a true estimate of value. 

When deciding on a sales price, remember to consider the additional fees you incur in selling your car, such as title transfer fees and taxes. These fees differ state to state.

Step 3: Decide How To Sell Your Car

When selling a vehicle, you have multiple options. Let’s take a look at the pros and cons of each.

Private Party Sale

Best for: Sellers who can leverage their time for more profit elsewhere

Pro: Most profit

Con: More time and effort

In a private party sale, you advertise your car yourself and find a private party to purchase it.  You’ll likely get the highest offer for your car when you go through a private party sale.

On the other hand, it can take more time to screen potential buyers and eventually sell your car. If you still owe money on the loan, it can take time for the lien holder to release the title into the new owner’s hands. Also, if you ever sell a car that breaks down immediately, you could be opening yourself up to a lawsuit. 

Safety and security are also considerations when thinking of a private party sale. There is always a risk of accepting cashier’s checks or other types of transfers outside of full cash at sale. Make sure the funds clear before handing over the title and releasing the vehicle.

Dealership Trade-In

Best for: Sellers who want a new car

Pro: Easy transfer of ownership

Con: Least profit

If you’re selling your car because you need (or want) a new vehicle, a dealership trade-in might be your best option, especially if you still owe money on an auto loan. This transaction smoothly closes out your existing loan and applies any credit to your new car. You get rid of your old car and get a new car all at once. The trade-in value of your old vehicle is applied to the purchase price of the new car.

Unfortunately, a dealership trade-in almost always gets you a lower price than a private sale. A dealership has to account for cleaning, maintenance and repairs, and advertising costs, so their offer price is less negotiable than with a private party. 

Instant Cash Offer

Best for: Sellers who want a secure cash flow quickly

Pro: Quick sell

Con: Moderate profit

Online retailers provide instant cash offers for used vehicles. You simply fill out the details of your car and receive an instant guaranteed price for the vehicle. Next, you’re contacted to schedule payment and transfer of the car. You receive your guaranteed price as long as your vehicle passes inspection and matches the condition you claimed. 

Rocket Auto’s dealership partners can give you an instant cash offer. Even if you don’t want to sell your vehicle online, you can use the cash offer to compare other offers from in-person dealers and peer to peer sales.

An instant cash offer is ideal if time is of the essence. You immediately get to find out how much money you’ll receive, don’t have to worry about negotiations and get your money quickly. 

With a cash offer, you’ll likely receive less than you would through a private sale and more than through a dealership. You’re really paying for the convenience of getting rid of your car and getting the money quickly.

Step 4: Advertise Your Car.

You can skip this step if you’re going the dealership trade-in or the instant cash offer route. However, a private party sale requires some advertising. Here’s what this might entail:

List your car across multiple sites. You’ll get the best success if you list your vehicle on numerous sites. Some popular websites include Craigslist, Facebook Marketplace, Autotrader and Cars.com.

Field offers. When offers start to come in from all the sites, you can expect many people to have questions about the car. Some might try to lowball you or negotiate right away. You should respond to every reasonable message quickly, as prospective buyers are probably messaging multiple car owners at once. 

Set up a test drive. You’ll need to find time in your schedule to offer a potential buyer the opportunity to test drive the vehicle. Every time you give a test drive, you spend money on gas, add mileage and risk an accident. As a result, only provide test drives to people who seem serious about purchasing the car. 

It's also worth noting that safety can be a concern when agreeing to meet a stranger for a test drive. It’s wise to have a friend or family member with you at the time of the test drive, to meet in a well-lit, public place during the day and to record the person’s information before setting out on the drive.

Step 5: Get Paid.

If you’re selling a vehicle to a private party, you have to take extra steps to ensure the transfer of funds is secure. Tell your buyer you’ll only accept cash, cashier’s checks or bank drafts. Set the expectation that you will not release the vehicle and title until their funds clear. Personal checks and wire transfers are more susceptible to fraud, so avoid these forms of payment.

When you complete a dealership trade-in, the dealership applies the credit from the sale to your new car price. You likely won’t walk away with any money, but your new car will cost you less. 

With instant cash offers, you often can trade your car in for a check the same day. 

The Rocket Auto Bottom Line

Selling your car isn’t overly complicated if you know what to expect. Now that you can answer the question, “How do you sell a car?” you can weigh the advantages and disadvantages of each option based on your needs and rest assured you’re making a confident decision.

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