My high school aged son has been working for almost two years now, and saving his money. Buying his own car has been on his wishlist, and his potential first vehicle fell into his lap this week as one of his coworkers is selling his car. It’s a nice car, 6 years old, with low miles. We’ve got a lot of work to do to make sure it’s affordable and worth the asking price, but if we do purchase the vehicle it will be a private party sale. Buying a vehicle from a dealership is easy, as they take care of all the paperwork. But what would we have to do if buying a car from a private party?
Bill Of Sale
Some states require a bill of sale be completed for a private party car sale. A bill of sale will include the signatures of both parties, the sale price, VIN, and other important information. You can find out if your state requires a bill of sale here. If you are involved in a private party car sale, a generic bill of sale form can be found here. Even if one is not required, completing one is always a good idea to properly document the transaction.
The title is an official document that describes the vehicle, as well as lists the owner. As part of a private sale, the title is signed over to the new owner. When a sale occurs, both the seller and the buyer must sign the title as we well as fill out other information. Directions usually are included on the title itself. The new owner then must take the title to the licensing center to pay the fee to have the title officially transferred to the new owner.
Title Transfer If Bank Owns Vehicle
If a lender holds a loan note on the vehicle, the bank may be listed on the title or the seller may not have the title at all. In these cases, the seller may have to issue a bill of sale to the buyer, and have it notarized. The buyer would then take the notarized bill of sale to the licensing center to get a temporary operating license until the seller uses the funds provided to pay the loan in full and have the title issued to them. It is highly recommended to contact your lender to get specific instructions on how to handle this situation correctly.
Sales tax is tacked on to many things consumers buy, and automobiles are no different. When a vehicle is purchased from a dealer, the dealer calculates and adds the sales tax for you. However, when a vehicle is sold privately, sales tax is collected at the licensing center when the buyer requests the title transfer. The amount of sales tax collected varies by state, therefore check your state’s website for specific information regarding taxes and fees collected when a title transfer is performed.
Buying or selling a car privately isn’t as easy as just exchanging keys and cash. There are several important steps in the process that must be handled correctly or the sale might not be valid. After doing a little research I feel comfortable with what needs to be done should we decide to move forward with buying my son’s first car from a private party.
How about you, EOD nation, have you ever purchased a car through a private party? Did you research it ahead of time and know exactly what you were getting into?