I recently asked a seasoned friend about buying cars off Craigslist after being frustrated with all the SEO spam I found on Google. This was his response:

Well, all states are slightly different with how they deal with car registration and ownership titles. The way it works in most places is that every car has a piece of paper that goes with it called the title. The title has all of the current owner's info on it, as well as the Vehicle Identification Number (VIN), and when you're selling a car, there's an area on the back you fill with the new owner's info, car mileage, and seller's signature. This area on the back counts as a "bill of sale". It used to have to be a separate document that was kinda written up in legalese; "I, ______, sell this 1997 toyota corolla (VIN #SDFSLJDKLSJGD52345234) to ______ on this day, may 18th, 2008 for 42 dollars. Signed, Seller: ______ buyer: ______" But in Colorado they've integrated this into the bill of sale, so you don't need to do this anymore here. The most basic way to determine if a car is stolen is if the seller has the title that matches the VIN stamped onto the car. If you have a signed title/BOS and the car it belongs to, its kinda like a endorsed check, anyone who wants to own the car just now needs to write their info in on the title and take it to the DMV. If they don't have a title, don't buy the car. It might not necessarily be stolen, but it might be, and its a HUGE pain in the ass to get a 'replacement' title made for a car, especially if you don't own it. In California, titles may be called pink slips, which I'm sure you've heard of if you've seen any of the 3 Fast 3 Theerious series. I believe they function the same as CO titles, from what I'm reading. Here's a list of everything you need to transfer the car to your name after you have the car and title in hand: http://dmv.ca.gov/vr/vr_info.htm#BM2522

Sounds like you need the endorsed title, probably with your info on it, and a smog certification (which you'll either get this from the seller (in CO the seller is legally required to have the emissions tested before selling vehicles, but this RARELY happens), or have to find an emissions testing place and go there yourself with the car). With these, you can go to a DMV and get the title put in your name, and they'll give you plates. View this video: http://apps.dmv.ca.gov/vr/vrvideos/title_transfer/title_tran... - Shows you where to sign and everything. This is very important; if the seller fucks up his/her name on the title when signing it or something like that, it MAY void the title, and you have to get all this other shit signed and come back to the DMV and wait in line forever again and again. Bring a checkbook to the DMV, sometimes they don't accept credit cards. I think that about covers the legal parts of buying a car/registration.

As far as buying a car from CL in particular, you'll probably end up bringing cash, but leave it in your locked car til you decide you want to purchase said vehicle and see the title. Ask them if they have a smog certification or any of the previous records, if it can't pass emissions, you can't get it registered, which is coincidentally a great time for a car to be sold. Granted, most cars ought to pass emissions fine until like 200Kk miles. If the engine visibly smokes, you're probably fucked. Ideally, the car won't have been run before you see it, so it'll have a cold engine, this is the best time to see how the engine behaves; does it smoke? does it start up easily? Other major things to consider are leaks of any kind - BRING A FLASHLIGHT. An engine with no leaks is best, but a leaky engine isn't always bad; leaks coming from the top of the engine/where the headers are are bad, might be a head gasket blown. Leaks from around the oil pan area are common, and all that means is that you'll have oil stains on your driveway and have to remember to top off the oil every now and again. Check the oil level of the engine to make sure the owner isn't a jackass. Transmission leaks are the same, not too dangerous if you keep the oil level good, but generally, most people are too lazy to keep up with this shit so it gets broken. Just buy a car with no leaks. Drive the car, make sure it tracks straight down the road; if it doesn't, it might mean that it was crashed and the frame is bent, or maybe the alignment is off because they curbed one of the wheels bad. If you're feeling paranoid that its been wrecked or something, you can call ahead to get the VIN # and get a Carfax report on the car, which shows its whole history of reported accidents. Anything large enough to warrant not buying the car will be on this report, minor fender benders may not be. Make sure the transmission shifts into ALL gears, I got screwed on this once, transmisson had 6 gears, but I didn't take it to a highway or even try to put it in 6th while testing it out, and low and behold, the 6th gear is out. Listen to the engine for any abnormally loud "click" type noises - every engine's valves click a bit, but they shouldn't be too distractingly loud. Make sure all the lights/signals work. People who are too lazy to replace a blinker bulb might be too lazy to change the oil on time... I can't think of much else, and I've been typing for like 30 mins... The only piece of advice my dad gave me before buying my first motorcycle was, "if it looks good, and sounds good, buy it." Basically, look out for any red flags, but by and large, most people are legit, most cars aren't lemons, and any serious issues with the car should be pretty obvious.