Auto Loans

Car Bill of Sale 101

Upgrading to a newer car often requires selling your current vehicle, and while there are plenty of steps you’ll need to take throughout the process, selling your car might not be as complicated as you think. There are a few things you should do in order to make the process run smoothly throughout, but one key piece you should pay attention to is the bill of sale.

This document can help prevent misunderstandings between you and the buyer, and it shows that you have legally sold your vehicle to someone else. One of the most important steps in selling your car is to be sure that you have a bill of sale. While it may sound complicated, here is everything you need to know about a bill of sale.

What is a bill of sale for a car?

A bill of sale is a document that shows that you have sold your car to another person and includes basic information about the vehicle and the terms of the sale.

Bills of sale have been around for hundreds of years and were (and are still) used as a way to prove that ownership of goods had been transferred, for everything from dogs and horses to boats and property. Today, the principle of a bill of sale remains the same. Both parties walk away with a signed document that outlines exactly what they got out of the arrangement.

The bill of sale for your car serves two legal purposes:

  • It confirms that the car has transferred ownership from one party to another. It documents the date of the transaction, the purchase amount, and any other pertinent details for the sale, which vary by the state.
  • It serves as a contract. The bill of sale proves that the buyer has taken ownership of the vehicle. In many states, the buyer will need to present a bill of sale in order to register the car in their name. Plus, if the vehicle is in an accident or a traffic violation, the bill of sale ensures that the seller is not responsible for the damages associated with either infraction.

The bill of sale eliminates any potential confusion between the buyer and the seller. Each party will walk away with signed copies of the document, so you both understand the details of your transaction.

As the seller, it is your responsibility to draft the bill of sale or provide one. As a buyer, you should ask about procuring a bill of sale, but ultimately the seller should draft this document.

Once the transaction has been successfully completed, you should provide the bill of sale.

Each party should keep a copy of the bill of sale for their own records. Make sure to hold onto your copy. It can come in handy in the event of an incident involving the car.

Where can you find a bill of sale document for your state?

Most states require you to complete a bill of sale for any vehicle transaction. Not every state requires this step, however, so it’s good practice to provide a bill of sale anytime you sell a vehicle. No state will penalize you for providing a bill of sale for your vehicle transaction.

The best place to look for a bill of sale document for your state is to visit your state’s DMV website. There, they will provide you with all the details you need to know in order to sell your car, legally. The second best way to find a bill of sale template for your state is to simply search for “bill of sale car” and your state’s name.

For example, Florida Highway Safety and Motor Vehicles offers a bill of sale that any seller could easily download and fill out.

You should be aware that your state might have special requirements for selling your vehicle, in addition to simply filling out the bill of sale. Some states require that you have the bill of sale notarized. In order to get a document notarized, you will need to find a notary public who will verify the identities of the parties signing the document. Generally, you will need to pay between $0.50 and $10 per notarized signature, though the exact cost will vary by state.

Familiarize yourself with any additional or special requirements that your state might have before you finalize your bill of sale.

Can you write your own bill of sale? If so, how?

Yes! You can absolutely draft your own bill of sale document. Not all states provide a bill of sale document to sellers, but you have the option to draft one yourself. It is a good idea to complete a bill of sale in any state, even if you are not required to provide one. With this proof of sale, the new owner will be completely responsible for the car. It’s likely easier to find a bill of sale document through your state’s DMV, but creating one on your own is relatively painless.

The most important thing to do is check into your state’s requirements before you begin drafting the bill of sale. Each state has slightly different items that need to be listed on your bill of sale. Make sure that you have everything on the bill of sale when you finalize the transaction. Immediately after transferring the money and the title, both parties should sign the bill of sale as a record of their transaction. Both the seller and the buyer should get an original copy to take with them at the end of the transaction.

Here are a few things you can consider including on your own bill of sale:

  • Date of the transaction (the date that you accept the buyer’s money and sign over the title of the car)
  • Price of the transaction
  • Make of the vehicle
  • Model of the vehicle
  • Year of the vehicle
  • VIN number
  • License plate number
  • Any warranty information. As the seller, you will need to explicitly state what is covered by the warranty and what the warranty period is. The other option is to assume that the car is being sold in an “as-is” condition. If you choose this option, then you would not include any warranty information.
  • Mileage of the vehicle, some states may require more information about the odometer reading. Be sure to state the mileage exactly — don’t round up! In the worst case scenario, the buyer could be in an accident in one mile, but if this reading was rounded up then you could potentially be liable.
  • The seller’s full name, address and phone number
  • The buyer’s full name, address and phone number
  • Proof of the vehicle’s registration. As the buyer, make sure to check that the seller is the only owner of the car. As the seller, you should provide a copy of the registration to the buyer for their records.
  • Outline any stipulations about the sale. For example, you should disclose if the car was a gift or a partial gift.
  • Write an oath that the information provided by the seller has been provided in good faith without any attempt to deceive the buyer, under penalty of perjury. In order for this document to stand up in court, you should have a notary present to notarize the document.
  • Both the buyer and the seller should sign the document. However, in many states, it is only necessary that the seller sign the document.
  • Leave space for a notary to verify your signatures if it is required by your state.
  • The signatures should only be made once the funds have been transferred from the buyer to the seller.

Although this is an extensive list, it is not specific to a single state. It is a good idea to check with your state’s requirements before finalizing any bill of sale with the buyer.

Once you have completed the bill of sale, what’s next?

After you have completed the bill of sale, each party should keep a signed copy for their records. The bill of sale is a record of the transaction, but it is not the only paperwork you need to complete to finalize the sale. The bill of sale should be completed after you sign over the vehicle’s title to the new owner and collect payment.

The buyer will be able to use this bill of sale to register for the car in their name. Typically, the buyer will need to register the car in their name within a certain time frame. Once the car officially belongs to the buyer, they will need to register the car, fill out any other necessary paperwork required by your state, and pay any associated fees.

The bottom line

A bill of sale is a standard legal way to document your vehicle’s sale. Documentation is never a bad idea, especially in today’s world!

Even if you live in a state that doesn’t require a bill of sale, it is a good idea to create one to document your transaction. The document will provide a clean break between the buyer and the seller at the close of the transaction.

If you are ready to jump into a new car, then get ready to whip up a bill of sale as a part of your sales transaction.

 

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