How to Sell a Car to a Private Party Through an Installment Plan

You can get more money for your car when you sell it to a private buyer instead of to a car dealer. However, one drawback is that the buyer may be unable to give you the full amount immediately. This problem is solved if you agree to receive the payment in installments. The process of selling the car through installment payments is not complex, but make sure you have documents that prove the buyer's obligation to you in case of legal issues later.

Determine the Payment Schedule

Check the current value of the car based on its current condition to help you and the buyer arrive at a fair price. Various websites list the market value of a large variety of vehicles. They include and

Negotiate a down payment and installment payments with the buyer. The down payment could be a sizable amount, such as half or one-third the price of the vehicle, or it could be one or more of the installment payments.

Make It Legal

Make sure the buyer shows authentic identification and proof of his address. Keep a copy for your records. If you do not have proof of the buyer’s identity or address, he can disappear after making the initial payment. Selling your car through installment payments only to someone you know well as being honest and trustworthy could lessen the chance of problems receiving payments.

Draw up a contract stating the terms of the sale or have a lawyer do this for you. It should include information such as the price of the car, a schedule of installment payments -- including the date by which the car should be paid in full -- and the amount of each payment. If you prepare the contract yourself, have a lawyer review it to make sure it contains all necessary information so each party is protected.

Go with the buyer to a notary’s office, where you will both sign the contract and have it notarized. Give a copy to the buyer. Prepare the documents necessary for a vehicle sale in your state. Some states use a bill of sale in addition to a transfer of the title. Include the phrase “Sold as is” somewhere in the bill of sale or on the title so you can avoid possible legal problems in the future. Keep a copy of the documents for your records.

Finalize the Deal

Transfer the title of the car to the new owner after receiving the initial payment. Cancel your registration and insurance and turn in your license plates to your state's department of motor vehicles. Report the sale to the DMV so that you are not responsible for anything to do with the car in the future, such as parking tickets or other citations.

Your contract is proof of the buyer’s promise to pay. If the buyer does not honor it, you can use it to make a case against the buyer in court and receive the rest of your money. Obtain advice from a lawyer before you sell your car through installment payments. You may also get some valuable tips from people who have sold cars privately.

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